RPA is a valuable tool known for its ability to innovate, boost productivity, cut costs, improve the customer experience, and more. But beyond offering these attractive benefits, RPA also has a high potential for significant, fast ROI if you play your cards right.
The Institute for RPA estimates that RPA solutions can deliver an immediate savings of 25% to 40% in labor costs alone. Additionally, McKinsey Digital has found that automating business processes with RPA can result in an ROI of between 30 and 200 percent in the first year.
So how can your organization set up your RPA investment for optimal ROI realization? To capture this level of success for yourself, you must understand what to consider and measure throughout your RPA journey. But first, why is it so crucial to pay attention to ROI in RPA?
Why ROI Matters in RPA
ROI, or “Return on Investment,” is a project’s expected return in percentage terms. ROI is a critical tool for measuring the impact of your RPA investment with real data. With an understanding of your RPA initiative’s ROI, you can:
- Justify the initial investment to business leaders with data-driven evidence
- Make strategic decisions about the technology during planning
- Plan and build support for subsequent investments like expanding your RPA solution
- Improve and scale your RPA solution more effectively for better results
- Feel confident that your solution is performing at its highest potential and delivering optimal value to your company
As a result, it’s essential to understand that ROI isn’t just a final step to check off your list at the end of your RPA journey. You want a successful RPA implementation that delivers continual returns over time. But to make this happen, you must make ROI a key focus during planning, implementation, and governance.
3 Phases of ROI for RPA
The process of tracking one’s ROI for RPA as a benchmark consists of three distinct phases, each with major considerations and ROI-boosting opportunities of its own:
This is the planning phase. It’s never too early to begin considering ROI. Establish a baseline that captures where your processes are now, pre-automation. This will be useful when you want to measure ROI down the road. Doing so will be critical in helping you make the best decisions regarding your RPA program’s direction. But it can also be valuable in the present. Having this objective snapshot into your reality helps to ensure you’re attending to the right processes in the first place.
To get you started, here are a few starting points to capture your current reality.
- Customer Satisfaction
- Labor Costs
- Time Metrics (ex: how long it takes to complete a process)
It’s also important to study the details of your current processes and leave no stone unturned because there can be different indicators that go into analyzing ROI from one process to another.
Don’t wait to start collecting your ROI RPA data. As soon as your implementation is off the ground running, begin measuring and examining data relating to your automated processes. Such data may include changes in customer satisfaction, rate of errors, time saved, among others depending on the processes in question. Whether you’re noticing improvements in these changes or finding areas that are lagging, being proactively aware of these matters will help you make necessary adjustments to ultimately see better ROI.
Know that even after your implementation period has ended, there’s always room for improvement. After all, RPA should not be a one-time investment. Reinvesting in your solution with continual process improvement is key to long-term success in your organization’s RPA strategy and broader digital transformation.
RPA Center of Excellence
Another way to maximize your RPA ROI is to assemble a dedicated team of internal professionals that will work to monitor it. Organizations should create an RPA Center of Excellence (CoE), or a team that helps manage your RPA system to optimize returns and remain competitive. Your CoE will play a vital role throughout all three phases of ROI. Members should be well acquainted with your organization’s broader vision for digital transformation. This will ensure that your RPA implementation remains aligned with these goals from start to finish.
Within an ongoing RPA initiative, the CoE should aim to build a culture of continual improvement within the processes that have already been automated. The CoE should pay close attention to the solution’s costs and benefits and make adjustments accordingly to improve results further. It should also work to inform use cases for expanding your solution to other processes. One RPA investment’s success can help you identify other processes that may see similar levels of success.
Reach ROI Quicker with Change Management
Implementing new technology is exciting, but you can’t lose sight of your most valuable asset: the people behind your organization. When a massive change like RPA occurs without proper introduction, communication, or planning, employees can become overwhelmed and resistant.
As a result, change management is vital to the success of your RPA initiative. It can even help you reach ROI quicker. This is because effective change management can accelerate change integration with faster user adoption rates. Plus, it can help create a culture that embraces change, which also supports your overall digital transformation goals.
Reach ROI Quicker with Change Management: Change Management ROI
How to Calculate ROI for RPA Projects
RPA ROI Calculator
Put simply, you can calculate ROI by dividing the investment’s net benefits (benefits less costs) by its costs, according to Forrester’s Total Economic Impact Approach.
The Total Economic Impact™ Of Kryon Full Cycle Automation
Check out Forrester Consulting’s Total Economic Impact™ (TEI) study examining the potential ROI enterprises may realize by deploying Kryon’s RPA solution, and how to measure it.
But since RPA projects involve many moving parts and nuance, we must go beyond a simple equation. Consider the following 5 success measures to calculate ROI for extra insightful evaluations:
5 Robotic Process Automation Metrics: How to Measure RPA Success
1. Employee Satisfaction
The processes that RPA automates tend to be ones employees dread most. As a result, taking the busywork out of their days makes for happier, more fulfilled, productive employees. Because this is a form of soft ROI, it’s trickier to measure. Still, you may notice it in changes like lower employee turnover rates, employee satisfaction surveys, productivity, and other forms of feedback
2. Customer Service Availability and Quality
The modern customer doesn’t want to wait for service. This has inspired many organizations to offer RPA-powered service 24/7/365, like chat bots. This is where service availability comes into play. This measurement accounts for both process downtime (DT), or the time in which a service is unavailable during a reporting period, and agreed service time (AST), which is the amount of time where a service is available. It’s also important to consider the value of improved customer service availability through any customer experience metrics you can access. Changes in quality of said service is also worth tracking, whether through customer satisfaction measurements or other data.
3. Better Business Agility
RPA can improve technological flexibility and save significant amounts of time for human employees. As a result, any improvement to business agility is a critical success measurement to track. You can find it by measuring the amount of new strategic initiatives and determining their value.
4. Full Time Equivalent
Full Time Equivalent (FTE) is the number of working hours that a single employee completes in a month, year, or other specified time period. When a manual process becomes automated, the question becomes, how much time are you saving by taking humans out of the equation? Perhaps the process would have required hiring temporary workers to get the job done, but the cost disappears when you bring robots aboard instead.
5. Process Lead Time
Process lead time is the time reflecting the start of the work through its end for any given process. Many processes involve some form of waiting, which is time wasted. When you optimize a process with RPA, however, you can skip these inefficiencies. Speeding up your process lead time can also allow you to get a higher volume of work done, increasing productivity and potential revenue as well.
6. Hours Back to Business
Ever heard someone say, “RPA is going to take away all our jobs?” Fortunately, this sentiment is a myth. Processes automated by RPA rarely leave their former employee attendees jobless. Typically, these very processes that were taking employees’ time and energy away from performing the main functions of their jobs. In essence, RPA takes the robot out of the human.
You can identify a process’ hours-back-to-business by determining the value of the hours that the automated process saved the employee. Hours which the employee instead spent attending to other valuable work.
7. Business Continuity Impact
RPA has become renowned for its capabilities surrounding business continuity and disaster recovery, and for a good reason. Organizations that decrease their dependency on human employees regarding key processes can often see a reduced business continuity risk. Be sure to calculate the cost of potential downtime an incident could cause. Consider its risk and what you could gain from decreasing or completely eradicating it.
8. RPA Savings
When there are fewer errors to fix, there’s more time for productivity elsewhere. The time that was once dedicated to preventing, identifying, and addressing errors are known as quality costs. Don’t forget to measure the cost of any process-related errors so you’ll be able to account for this saving.
Set Yourself Up for Success
With strategic planning, delivery, and maintenance, you can maximize the measurable impact that RPA makes on your organization. And don’t let a single improvement occur without your knowledge – you deserve to celebrate every victory your RPA investment brings, big or small! When you’re ready to get started on your RPA journey, contact us to set up a consultation.
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