Measuring ROI For Effective Implementation and Scaling RPA Efforts
RPA has paved the way for many companies to automate repetitive jobs and remove the hassle of mundane tasks. Since 2019 the adoption rate of RPA boosted by 8%, yet many companies find it difficult to calculate the ROI of these projects. This leads to restricted adoption rates and limits the growth potential of RPA.
Measuring the ROI (return on investment) of RPA automation helps companies justify their investments and analyze the scope of improvement. Moreover, it assists in decision-making about investing more or less into RPA. No company invests more if they don’t get desired results. So, if they wish to improve and scale RPA to its maximum potential, they need to measure its ROI.
However, businesses either don’t measure the ROI or opt for a faulty mechanism which leads to misleading information. Many companies get away with it due to the added cost and resources required. Apart from this, calculating the ROI of RPA is difficult due to indirect and miscellaneous costs, which companies often tend to ignore. Moreover, RPA offers many intangible benefits which are hard to account for.
RPA’s cost and benefits are indirect and require the companies to account for unaccountable. But, following a proper framework that includes all the indirect, intangible, and miscellaneous costs and gains, can be effective. It will give a true picture of the real yields for the business.
Here’s a 3-step framework to calculate the ROI of RPA projects, which is comprehensive and gives a true number for the benefits leveraged.
The process to Measure the ROI of RPA
The ROI measuring process is a simple 3-step procedure that includes setting goals, deciding scope, defining KPIs, finding estimates, and finally calculating the ROI. Many companies make an error while finding estimates due to indirect and miscellaneous costs. But, we will address in further sections how to ensure no errors and get a true ROI for your RPA projects.
#1 State The Automation Goals and Scope
The first step of automation starts with setting goals and having a clear vision. Get all the stakeholders on board to decide the tools, scope, and expectations, and lay a base for the entire automation plan. You need to prioritize the business goal and align stakeholders’ interests with the automation strategy.
In a nutshell, this step involves discussing and planning the essentials of automation for your business. What to automate? What is the budget? How many tools and softwares are involved? What will be the expected result? How much do you wish to automate and save? With all these questions, you complete the planning stage to finalize the goals.
In the next step after deciding the processes and expected results, businesses finalize the processes to automate. This is core to automation- deciding the process and the scope. Do you want to automate an entire task or a portion? Which process to automate? How many resources will it save? While deciding the process to automate, keep these 4 factors in mind:
- Automate rule-based structured tasks
- Choose tasks that are mundane and time-consuming; you don’t want to spend millions to save thousands
- Opt for jobs that deal with standard, readable, and structured data
- Pick tasks with high-value low complexity, especially when starting out
So, a task like assigning tickets to the right department is automatable. It is a rule-based task that takes a lot of time and doesn’t need any specialization. Moreover, the data is structured and standard in many cases, if not all. Plus, it is a high-value task as it directly impacts customer satisfaction.
#2 Pick KPIs
Different stakeholders have different priorities. Hence, deciding top 3 or 5 KPIs is crucial that cater to the needs of all the stakeholders. Some of the top KPIs (key performance indicators) opted by businesses are:-
- Reduce labor costs
- Increase accuracy
- Save time
- Enhance the RPA implementation time
- Improve customer and employee satisfaction
- Minimize business downtime
Based on your goals, you can define specific metrics and KPIs to measure them. For instance, in regards to automating the ticketing process, KPIs could reduce hours on segmentation, increase the number of tickets resolved, and improve customer satisfaction.
#3 Finding Cost Estimates and Calculate ROI
Finally, you estimate the cost of resources saved and bots. The formula to calculate ROI is
(Employee cost – Bots cost / Bots cost) X 100
With this formula, you get in percentage, how much ROI your RPA project generates. Now, the most common mistake here that companies make is not including all the direct, indirect, and miscellaneous expenses. For instance, the employee cost is not restricted to payroll.
So, if you wish to calculate employee cost, let us suppose the ticketing process. We assume there are 4 employees, working 40 hours a week, who spend 8 hours a week on ticket assortment. So, if the monthly salary is $5000 each, then the cost becomes $4000. In addition to this, you need to account for office charges, software charges, and other expenses. A better way would be to calculate based on CTC (cost to company), which would give a better estimate.
Similarly, in the case of bots, you need to include set up cost, maintenance cost, subscription cost, etc. On average, it takes about 6-8 months for an RPA project to show results and generate positive ROI.
Finally, with the estimates in hand, you calculate the ROI of the RPA projects. This would account for both values of error reduction and process acceleration. Still, one of the biggest problems at hand is calculating intangible benefits.
Accounting for intangible assets requires setting defined goals and attaching relevant KPIs. For instance, employee satisfaction can be measured with higher productivity and lower turnover rates. Similarly, business agility is measurable with the frequency of new strategic initiatives.
Improving ROI Of Your RPA Projects
RPA projects might seem complex when it takes longer to implement and don’t show results almost instantly. But with proper research and planning, you can save a lot of resources for your business and enjoy many intangible benefits.
EmergeFlow helps to automate business processes with RPA. You can get on a free consultation call to understand your business needs and automate for enhanced business agility.
