Return on Investment (ROI) is a measure of the impact of an investment. It tries to directly measure the return on a particular investment relative to its cost. The simplest way to measure the ROI is (the current value of the investment – the cost of investment). If the result is positive, you have profit; otherwise, you will lose part or whole of the investment. This is, therefore, a measure of direct financial benefit.
For any IT projects or proposals, ROI is the measure to decide if the project is worth considering for investment. Regarding technology investments, ROI has two dimensions to look at. They are financial and non-financial benefits. In this blog, we will dive deep into the world of automation technology, “Robotic Process Automation (RPA),” and try to understand the ROI benefits it offers from both finance and non-finance dimensions.
Before getting into the ROI, let us understand RPA better
Robotic – An intelligent program that mimics the way humans go about doing things
Process – A sequence of steps that are executed to achieve certain business objective
Automation – Which removes human intervention
Based on the above definition, if we are implementing an RPA solution there should be an intelligent program that has to be developed to automatically perform /execute the process without human intervention. Let’s keep the maintenance of the RPA program aside for now.
In ROI terms,
Robotic – We have to invest in writing an intelligent automation program (It is a cost of investment)
Process – sequence of steps that are to be automated ( To realize financial and non-financial benefits)
Automation – leads to workforce availability for further initiatives (Reduces or eliminates costs)
The following mind map of the ROI dimensions:
Let’s us take some scenarios for RPA implementations and make an effort to map the benefits to ROI dimensions shown above.
| Category | Use cases | Direct financial Benefits | Non-Financial benefits |
|---|---|---|---|
| Task Automation | Perform daily system health check, backup etc. | ~ Hundreds of $ savings per month per FTE | FTE effort is reduced
~hundreds of FTE Hrs of time is saved |
| Build Deployments | No extra manpower is required | -Ability to deploy more (~double) builds on daily basis | |
| Claims processing | $ savings per FTE |
|
|
| Downtime Reduction | Pro-active maintenance workflow | Reduced $ value loss to business
(~30K per year) |
-Avoid losses of productivity
-Reduced number of outages |
| Auto Restoration process | Reduced $ value loss to business
(~30K per year) |
-Improved system availability | |
| MTTR | Incident Resolution | $ savings on support FTEs |
|
It is worth noting that the returns of an RPA project either fall into cost savings or improvements in quality, availability, productivity, and efficiency. Most of the use cases identified did not add net new revenue or increase revenue. It is the savings that impact the ROI for most of the RPA implementations. This gives us the insights regarding the kind of projects that should be selected for RPA implementations. The focus should not only be on how many FTEs can be eliminated to enable cost savings. It is important to identify the most critical business processes that lend themselves to be automated and assess the returns of automation in the form of $value savings, reduced losses, improved productivity, saved time, enhanced quality, and overall end-user satisfaction. Creating the positive impact on these parameters will have greater impact on the ROI of the investments made in RPA implementations.
It is also worth considering factors like time, cost and effort required to maintain these RPA implementations. The adoption of technology, tools, and talent in RPA has matured significantly compared to a few years back. This means that RPA Implementations can be considered@scale rather than go after small pilot projects. Out of the ROI from various aspects, it may be essential to compromise certain % to have realistic business benefits. That % value becomes the maintenance cost, so a new investment is unnecessary. Hence, the calculation of maintenance efforts is not a straightforward logic. It calls for a consulting-driven approach to assess the impact of the RPA project on the business and maintenance cost. The consultancy process is also powerful enough to create opportunities for RPA projects to generate new revenues or increase business revenue.
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