When it comes to RPA, incumbent service providers with sizable FTE-based IT and BPO contracts are finding themselves caught between a rock and a hard place. On the one hand, clients are clearly keen on leveraging benefits from recent advances in intelligent automation. On the other hand, implementing innovative RPA solutions likely means replacing existing service delivery models and (gulp) cannibalizing existing revenue streams and the bread and butter of the service-based business.
While it’s a thorny dilemma, hanging on to existing business at the expense of driving innovation is a short-sighted strategy. Indeed, the harsh reality is that if an incumbent provider won’t take steps to introduce new capabilities, the client will find a willing and able alternative. Incumbents who fail to demonstrate a proactive and customer-centered approach risk exposure to other providers who will be aggressively open to eating their lunch.
Deep down, I think most providers recognize this, so the question becomes how to drive innovation in a way that is minimally disruptive and optimally beneficial. As a buyer, I can say that coming to the table with recommendations on how to implement RPA demonstrates a willingness to invest in a customer’s success and, as such, addresses a key requirement of the “strategic partner” checklist.
Moreover, incumbent providers can use their knowledge of their client’s environment to optimize results from an RPA deployment. What better way to demonstrate quantifiable results and drive customer attention than to use RPA applications that cannibalize your own book of revenue? Delivering strategic improvements to the customer significantly reduces the commoditized view of service procurement practices and puts the provider in the driver seat for margin improvements. The existing relationship, meanwhile, can establish a basis for a conversation around a gain-sharing or re-investment arrangement so that both parties can benefit from RPA-driven improvements.
Finally, moving to RPA does not necessarily require a leap of faith into enterprise-wide transformation and disruption. Rather, a pilot or test-case approach confined to a specific business unit or function can be highly effective in obtaining customer buy-in, demonstrating results, building trust (in the technology and between the parties) and charting the way forward.
Ultimately, incumbent providers are ideally positioned to help their existing clients take advantage of the RPA opportunity. The long-term benefits far outweigh the short-term risk to revenue, not to mention the long-term inevitability of losing the business. RPA provides a game-changing strategy for service providers in the race to improve profitability – and it puts them behind the wheel of a fast car, rather than pushing a cart up a steep hill of low-margin revenue.
Guest author Purvee Kondal is a buy-side executive with a major North American financial services firm. She has more than 15 years of procurement, strategic sourcing, and vendor management experience with organizations such as Johnson & Johnson, General Electric and Bank of America.