STEP FIVE: ROI ASSESSMENT
A common problem with digital transformation projects is that management often has an expectation that each and every process automated needs to generate a significant return on investment in order for the expense to be justified. At the same time, staff carrying out the tasks are likely to understate how long a process takes or hide the error rate. This makes it difficult to accurately calculated expected ROI and does not take into account key factors outside the monetary.
It is entirely possible to conduct an ROI assessment with only a rough idea of how long that process should take and the potential costs, but you will need more accurate data down the line. This may mean screen recording and timing the process. As you might imagine, being asked by leadership to explain exactly how a particular process is bound to make people worry they are to be replaced! It’s important that before this exercise is carried out that staff understand what the technology is and how it will help them. Automation will take away painful tasks, not replace people.
Key lesson learnt
ROI Criteria
- How many people?
- How long to process?
- How many errors?
- Cost of errors?
- What other value-add activities could your team be doing?
- Would the elimination of mundane tasks aid employee engagement/morale?
- What value would be added by ensuring a standard process is carried out where humans entering data with different criteria in mind create discrepancies.
Example
A busy aerospace manufacturer has a lot of uncommon components they need. Their team of two people in procurement need to onboard 50 new suppliers each month.
In this example we have been able to identify £2760 of savings that could be made by automating this simple process. There would also be a cost associated with delays associated with errors which would no longer be a problem once automated. In terms of non-monetary gains, it gives the purchasing team 2 more days a month in which they can do site visits and build relationships, instead of paperwork.
When it comes to measuring automation success, it can be done in many different ways including cost savings, revenue increase, better compliance through accuracy, and easy experience enhancement for employees as well as customers. You may see a return in a number of different ways:
- Reduction of man hours
- Reduction of Total Throughput Time
- Increase of frequency
- Increase in volume
- Avoidance of license cost (if legally possible)
- Reduction of outsourcing/transfer to insourcing
- Higher data quality
- Reduction of human errors
- Reduction of overtime work
- Transition to more value-added work
- Reduction of outsourcing/transfer to insourcing
Most organisations typically focus on the monetary savings of projects as a way to add value, which is valid. However, efficiency savings are also a major part of automation that should not be discounted simply because it does not result in cost savings. If a processes are held up due to time zone differences, and a bot has the ability to run the process the same way an employee would do, then it saves time for the employee and the team. In this situation, when the employee comes into the office in whichever global location they are in, they can immediately begin their day with the completed bot process. There are many scenarios similar to this in which the focus should be more on efficiency than cost savings.
Another area which is often overlooked for RPA in particular, is that it can be used as a tool to extend the features and lifecycle of legacy systems which hold critical data.
Complete your learning
