This post is part of a three-part video series, The automation opportunity in private equity, developed in partnership with Privcap. The videos offer insights on the incredible advances offered by automation.
Automation technology is a big deal; it is improving quickly and it is capable of transforming business operations. In just a few years, advances in automation—variously categorized as robotic process automation (RPA), artificial intelligence (AI) and machine learning—have been astonishing.
Private equity specialists Dave Noonan of RSM, Cory Eaves of General Atlantic and Tamas Hevizi of Automation Anywhere share the automation developments they’ve experienced first-hand and recent examples of how advances enable portfolio companies to automate tasks that were once manual, cutting expenses and improving accuracy in the process.
"It's changing day by day," says Eaves. "We purchased a small company that provided [RPA] technology, and it was crafted by 10 PhDs from Harvard, hand built. Now essentially the same service is provided on Amazon. And that's in the space of three years. It went from academic research to deployment to now essentially a commodity service that you can buy online. And that pace absolutely continues in the space."
Hevizi stresses that automation is going to streamline the operations not only of companies that are already sophisticated in technology, but of companies that markedly are not sophisticated, which have many mundane, repetitive tasks performed by humans.
"What we're finding is health care companies and utilities getting into automation because they are stuck with a massive amount of manual work," he says. "In private equity, almost every portfolio company and investment thesis is going to look at revenue cycle management. And a lot of revenue cycle management optimization depends on doing something manually with paper. It's just a lot of papers and a lot of manual steps. We work with a lot of customers that have millions of claims they have to process every year, and they have hundreds of people doing it. There's zero value added to that being manual versus that being automated."
Picking up on the health care example, Noonan notes that many payer organizations are saddled with notoriously antiquated systems. "Traditionally, the only way to interface with those systems was with a human being," he says. "You took out what you wanted to get paid for, and you had a human being type it into their website so that you actually got paid. And that's actually a perfect example of where some of this technology can automate away the need to do that."
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