Many businesses require back-office functions to process information and transfer the information from one system to another. For example, the sales teams in a business may submit their expenses using one system and a member of the finance team may have to process that information and transfer the data to another system, from which yet further staff process the payments to company credit cards and to the sales teams. In many medium- and larger-sized enterprises, accountants and members of the finance team do a lot of manual work in handling and transferring data.
This type of work can be labour intensive and not very efficient. In addition, the nature of the work and the fact that much of it is at a relatively low level of skill, allied to the multiple systems that are often involved, means that there is greater scope for human error to occur. These mistakes can be magnified throughout the business, resulting in increased costs.
Robotic process automation (RPA) is a type of software that replicates the work of a human in conducting process-driven tasks. RPA can do these relatively mundane, repetitive and tedious tasks faster than humans, with a far greater degree of accuracy and at much lower cost that paying a human a salary. The use of RPA can mean that the humans employed can be freed up to do less mundane and repetitive tasks. RPA has particular relevance in finance and accounting back-office tasks of the type described. RPA is particularly suited to tasks that do not require any judgement or reasoning, but are rules-driven processes.
It is not simply the case that RPA can help reduce costs; it can also be highly beneficial in ensuring firms comply with accounting and auditing regulations. Ensuring appropriate compliance can be costly for firms, and it has been suggested that RPA could help significantly reduce compliance costs. Because RPA is especially valuable in carrying out repetitive tasks, it can do so without needing to take a break, go home, have lunch, or be suffering from a hangover or flu!
All these repetitive tasks are carried out with complete accuracy.
Critical Thinking Questions
1 To what extent do you think that labour intensive work in service-related firms is ‘inefficient’?
2 If firms adopted RPA, how might this change the shape of the isocost curve facing the firm, and how might it, as a consequence, then change the least-cost input combination?
You can illustrate your answer using an appropriate diagram. 

3 In what way do you think RPA can improve productivity levels in a firm, and what might the limitations be of RPA?
4 Assume that a firm operating in the financial services industry employs large numbers of back-office financial staff to carry out repetitive, menial tasks. The only other factor the firm employs is capital in the form of information technology (IT) equipment. Sketch the firm’s possible production isoquant before and after the implementation of an RPA system; explain the thinking behind your diagram.
5 Why do you think that improving compliance with regulations and laws is an important consideration for firms who might be considering adopting RPA?