What does Automation mean for Business?
Posted by Adam Walters, Founder of Gear Geek, 1 March 2021.
What is Automation and why is it significant in Business?
Automation can be generally defined as the creation and application of technologies to produce and deliver goods and services with minimal human intervention. The implementation of automation technologies, techniques and processes help to improve the efficiency, reliability and/or speed of many tasks that were previously performed by humans. Automation has been used in a number of fields, such as manufacturing, utilities, transport, defence, facilities, operations and recently, information technology. Usually, automation is employed to minimize labour or to substitute humans in the most menial and/or repetitive tasks. From the simplest to the most complex application, automation is present in many forms of our everyday life. Common examples include household thermostats controlling boilers, electronic navigation systems, the earliest automatic telephone switchboards, or even the most advanced algorithms behind the emerging self-driving automobiles.
Automating tasks previously done by hand to simplify and enhance production is nothing new. Humans have been doing this since 350 BCE, when the first waterwheels for processing grain were recorded in Syria and Egypt. In the present day, many businesses are embracing technology to automate manual processes, often generating a 30-200% return on investment in the first year of doing so. With 74% of organisations actively looking for new use cases for automation, it's no surprise that by 2022 it is estimated that 42% of total task hours will be completed by machines. There are numerous types of automation currently being used by businesses, from sophisticated AI software to tools with more basic functionality. Globally, almost half the activities employees perform have the potential to be automated using existing proven technologies. There are several ways in which businesses can harness the power of automation to achieve a competitive advantage and it is vital that businesses gain a clear understanding of automation, its benefits, its various applications, but also the challenges it poses.
The benefits and challenges posed by Automation
Automation is continually evolving with new software, AI-driven hardware and service industry robots developed as both leaders and employees see the benefits and demand ramps up.
Here are some of the key benefits that automation offers to Business:
- Increased productivity of the workforce: automation frees up employees' time to focus on more high-value tasks.
- Ability to handle increased volume: automation enables businesses to process more jobs, faster.
- Cost savings: automating tasks means available 'man hours' and the opportunity to reduce the workforce without reducing the level of output.
- Reduction in human error: software reduces the chance of human error, for instance humans could potentially no longer be manually inputting masses of data.
- Customer satisfaction: automation improves the service provided to customers, for example, by speeding up the time it takes to order a product or book a service.
- Employee satisfaction: employees no longer need to work on repetitive, mundane tasks.
- Better insights and data: tracking data allows for better analysis and improving procedures, potentially in real-time.
- More efficient and targeted marketing: automation means businesses can hone their marketing activities to focus on core audiences with CRM software or by using digital advertising.
Generally, automation ensures that techniques are used effectively in the production and delivery of goods and services.
However, it does inherently cause many workers to become unnecessary (especially unskilled ones) and end up being displaced.
Automation will certainly have substantial negative effects on employment and wages for all those occupations that do not require particular training or skills (in fact it already has). However, many of these employees could be easily retrained and reskilled into new 'digital jobs'- and the impact of this technology on our society is revolutionary enough to create new opportunities for everyone.
According to the World Bank's Development Report 2019, the positive economic effects in terms of new industries and jobs available far outweigh the negative ones, yet automation-based technological unemployment is still a cause for concern that must be discussed and dealt with.
Nevertheless, despite advances in automation, some manual intervention is always advised and needed, even if the automation tools can perform most of the tasks. Automation professionals involved in the creation, application and monitoring of such technologies are in high demand.
Automation is ultimately a net positive phenomenon- and the challenges it poses can be effectively remedied, as this article will discuss below.
"There will be fewer and fewer jobs that a robot cannot do better. I want to be clear. These are not things I wish will happen; these are things I think probably will happen. And if my assessment is correct and they probably will happen, then we have to think about what are we going to do about it? I think some kind of universal basic income is going to be necessary".
- Elon Musk, Founder and CEO of Tesla and SpaceX.
How can we make Automation work for all?
As already discussed, automation offers many efficiency, financial and satisfaction benefits to businesses, employees and customers. However, this article has also raised the genuine concerns that automation inevitably brings, namely the substantial negative effects on employment and wages for 'unskilled' occupations. This is why it is so important to mediate the negative effects of automation while allowing the benefits of it to flourish. Earlier we mentioned the need to retrain, reskill and retool employees who may lose their job due to automation, to prepare them for new jobs in a more digitalised, automated economy. We also referenced a quote from Elon Musk discussing his support for an idea called Universal Basic Income (UBI), a policy idea designed to mediate the negative impact of moving towards and increasingly automated economy.
Universal Basic Income (UBI) is a (potential) government policy programme in which every adult citizen receives a set amount of money on a regular basis. The common goals of a basic income system are to alleviate poverty and replace other need-based social programmes that often require greater bureaucratic involvement. UBI has gained traction as a policy priority in the U.S. as automation increasingly replaces workers in manufacturing (particularly in the 'Rust Belt') and other sectors of the economy- with former 2020 Democratic Presidential Candidate Andrew Yang being its key proponent with his plan to give every American adult citizen $1,000 per month from the Federal Government. UBI proposals do vary in size, however a common criticism of the programme is the cost, with some plans representing more than half of the entire US Federal Budget. Although, the US Federal Government already provides various financial support measures for low-income Americans , including through the Earned Income Tax Credit (EIC) and Temporary Assistance for Needy Families (TANF) programmes, at great expense and with huge bureaucracy costs.
It is hoped that the cost-savings through omitting cumbersome bureaucracy through a Universal Basic Income, in addition to the cost-savings and economic growth generated through automation to the economy, will offset the considerable potential cost of a UBI programme. A UBI policy has arguably never been more popular, as support has grown steadily for the policy in recent years, with a Hill-HarrisX Poll from 2020 finding that a majority (55%) of U.S. voters believe their government should implement a UBI programme, significantly up from just 12% in 2019. It has also arguably never been more necessary, as a 2019 report by the Brookings Institution found that a quarter all U.S. jobs are susceptible to automation- with the researchers arguing that roles involving more routine tasks, such as those in manufacturing, transportation, office administration and food preparation, are the most vulnerable. Supporters of UBI believe that a guaranteed payment from the government can help ensure that those who are left-behind, displaced or disrupted by this economic transformation, avoid poverty. Even if, as is likely, government-sourced income isn't enough to live on, it could theoretically supplement income from the lower-wage or part-time jobs these individuals are still able to obtain.
Hence, UBI could potentially be a very useful and effective policy to ensure automation can continue to develop smoothly and equitably, with the plethora of benefits it brings to Business allowed to shine.
We at Gear Geek champion the use of automation, and we realise the need to consider a range of policy solutions, like UBI to mediate its negative effects, and allow its many benefits to bolster the Business world going forward. Nevertheless, automation is a hugely important issue, not just in Business but in wider society. It is an 'elephant in the room' that can no longer be ignored- and its transformational benefits to human evolution cannot be understated.
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