Venture capitalists should think before investing in RPA tools

Despite the economic uncertainty, VC investment in Artificial Intelligence (AI) and Hyperautomation remains strong.  Emerging technologies is the fastest growing sector of activity as markets anticipate that organizations in all industries will increase their reliance on predictive analytics and cognitive intelligence.  Executives around the world are embracing the adoption of technology for complex decision-making scenarios that were previously considered “human tasks” as little as a year ago.

Prior to the pandemic, many organizations were adopting robotic process automation for tasks that were “rules-based” and, often, operational in nature.  These ranged from back-office tasks in human resources and accounts payable to supply-chain automation and vendor management.  Uses cases tended to be simplistic, leaving executives unable to calculate hard ROI.  The fact that many implementations did not correlate to direct labor cost reductions compounded the confusion surrounding value analysis.

In the early days of the pandemic, businesses found themselves in survival mode but are now planning for sustainability.  The foreseeable future will require leaders to reimagine work – i.e. what must be done and how that is accomplished.  Every process will be re-evaluated along with the associated tasks. 

For example, does every contract need to be manually reviewed?  If it does, what are the elements that require judgement?  Can that judgment be performed by cognitive intelligence that employs predictive analytics?  Even if it can’t replace human interaction in all cases, can I utilize it in 70%, 80%, or 90% of the cases?  If so, I can dramatically improve my labor costs.

Digital front doors are another area that is experiencing rapid adoption of the advances in emerging technology.  As consumers have warmed to virtual experiences, businesses are seeking ways to personalize touchpoints that encourage meaningful engagement.  Leveraging Hyperautomation with the power of modern CRMs enable a strategic analysis of individual customers that extend far beyond general market segmentation.

Healthcare, an industry that has traditionally lagged behind others in the adoption of new technology, is also rapidly adapting.  Virtual care has been embraced by patients and clinicians alike.  While it will not replace in-person care, it is extending care to rural areas, providing more convenient consultations, and allowing vulnerable populations to receive care from the safety of home.  Providers are still adjusting but all indications are that virtual care will remain a significant part of the care continuum that will increase as technological advancements increase.

[You may also like: RPA In The Fight Against COVID-19: Healthcare]

Even the M&A market has begun to incorporate these technologies into standard post-close integration playbooks as they utilize the next-generation tools for some of the most time consuming and error-prone piece of a conversion.  Regardless of industry, data sourcing/extraction, remediation/transformation, and data entry/staging are costly due to time and propensity of human error.  By embracing technology, post-close activities can increase their speed and accuracy with reduced costs.  Once the technology and processes are refined, they are easily incorporated into post-close playbooks to allow for rapid scalability.

As optimism surrounding artificial intelligence (AI) and Hyperautomation increase, VC firms remain bullish and steadfast.  However, adding emerging technology to your portfolio can be a bit more complex than that traditional deal.  This is especially true if the intention is to merge the technology into an existing platform.  A solid understanding of the technology and its underlying nuances are essential to a successful transaction value stream.

VCs investing in AI or Hyperautomation technology must validate their strategic goals and evaluate their analysis through expert due diligence and meaningful post-deal integration.  Wholistic deal evaluation is critical as they must assess technical infrastructure and the data that powers the technology for current state and evolution potential.  Additionally, does the technology have the ability to adapt to the business model requirements?  Post close, what are the skillsets required to operationalize and manage the technology? 

Another, often overlooked, consideration is the ethical underpinning of the technology.  Is there bias in algorithms and interpretability?  How difficult is it to modify and adapt to changes in regulations?  Can it adapt to geography or industry-specific regulations?

Investing in next-generation technology is essential to the progression of society.  The humanitarian and financial benefits far outweigh the short and long-term risks.  From an individual investment perspective, taking the extra time to address the intricacies of AI and Hyperautomation allow VCs to maximize the transaction value.  Developing a clear and customized framework reduces risk and accelerates a quick and efficient consolidation and integration.   

Every crisis produces winners who are able to rise to challenge and master it.  Investment in AI and Hyperautomation is the challenge of our current era.  VCs that are willing to perform the extra due diligence and post-close planning will position themselves as market leaders for the post-pandemic world.

About Author

Alice Khosravy, Chief Digital Officer & Advisory Board at 
Digital Health Innovations
Alice Khosravy, Chief Digital Officer & Advisory Board at
Digital Health Innovations

Alice help organizations create strategic value through digital health innovation. She accelerates their roadmap to operational excellence by focusing on enhanced customer experiences and cutting-edge industry best practices.
Alice solves the problems of tomorrow – today – by integrating the healthcare innovation ecosystem through the development of collaborative joint ventures and strategic alliances. She leads organizations through times of significant change and crisis to sustainable growth. And provide investment firms confidence through portfolio company turn-around leadership.

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