How to measure the ROI of an RPA programme

Intelligent automation has the potential to greatly improve efficiency, reduce costs, and increase productivity in various industries. However, implementing an intelligent automation system can also be a significant investment of time, resources, and money. As with any business decision, it is important to consider the potential return on investment (ROI) before embarking on an intelligent automation project.

Calculating ROI for RPA programmes is inherently difficult. The tendency is always to focus on the easiest measure, and frequently the key driver sought by the sponsor - FTE savings, however this carries some key problems with it - firstly, while there can undoubtedly be effort saved by automation, it is unusual that any individual works entirely on automatable tasks, therefore normally only a percentage of any individual is saved. Unless the process is carried out across a large team, savings may not amount to actual headcount reductions. Secondly, a focus on FTE is the best way to cause programme failure. Reference to that KPI will immediately generate resistance and fear- the biggest barriers to overcome.

Lets look at the full range of potential benefits:

1. Cost savings: Consider the current costs of performing these tasks, including labor, materials, and any other expenses, and compare them to the estimated costs of the intelligent automation system. Allow for 'Hours Saved' to be re-utilised by the business as a productivity increase, or to enable growth with a flat headcount. Don't forget to factor in any ongoing maintenance or support costs - in some cases these can be up to 80% of the overall costs. Ensure any labour costs are fully loaded and include eg training, onboarding, office space. licences etc.
2. Increased efficiency: Automating certain processes can also lead to increased efficiency. For example, an intelligent automation system might be able to process orders or handle customer inquiries more quickly than a human could. Consider the time and effort currently required to perform these tasks, and compare it to the estimated time and effort required with the intelligent automation system in place.
3. Improved accuracy: In some cases, intelligent automation systems may be able to improve accuracy and reduce errors compared to human workers. This can lead to cost savings due to fewer mistakes or rework, as well as increased customer satisfaction and loyalty.
4. Other benefits: In addition to cost savings, efficiency improvements, and accuracy enhancements, intelligent automation can also offer other benefits such as increased scalability, improved compliance, and reduced risk. It is quite common for automation to result in happier, more motivated teams with reduced turnover and need to recruit.

When implementing a programme , the first thing to define is the objective, and this may well come from the Board. The KPIs should reflect and measure the objective, but the CoE lead should also make the Board aware of other benefits they may have overlooked.

At the most basic level of assessment, measures will be translated into financial benefits to be compared against implementation costs, but some of the measures above may be intangible, and here some diligent creativity may be required to represent these in a way that makes business sense.

The key thing is that an assessment of benefit and cost takes place, and opportunities are prioritized. The precise methodology is irrelevant so long as the process is diligent and considered.

Once bots are deployed, there should be a process for monitoring and validating the benefit realisation. (This might be as simple as 'benefit per cycle vs number of cycle runs') although there needs to be 'real world' validation also to check that the quoted benefits enabled are actually being realised in reality.

It is worth noting that as with any project delivery, the CoE lead should take accountability for defining the benefits realisable, but the business should sign up to these at the outset and then it is their responsibility for delivering them once the bots are in place.