2019-07-03T08:35:00Z

How should I calculate ROI for RPA? How should I measure RPA success?


Many members of our community are looking to understand how to calculate the ROI of an RPA deployment. Is it based on cost reduction, revenue impact, compliance, experience enhancement for employees and/or customers, or something else?

What's the best way to measure the success of RPA?

Here's what we've found:

Evaluating top RPA tools, our members shared their insights into the cost benefit analysis and success measurements they believe are worthwhile to anyone evaluating using RPA for their business. Undoubtedly, there are many benefits of RPA, ROI and cost savings being the main factors. We've summarized our members points on how to calculate ROI and success.

Shrippad Mhaddalkar provides a itemizes potential elements needed to calculate ROI, which includes items such as effort saved, improvement of the output quality, gain in productivity, etc.

Return (i.e. savings)

  • Automation. Automation is intended to complete a task with a bot rather than an employee. Using the amount of hours the automation will save the employee and applying their hourly wage will give you the savings of that employee not doing that task. There are some limitations of RPA in what tasks it can accomplish, but careful task evaluation should align the task with the capabilities of bots. Additionally, RPA and AI can be used together to accomplish tasks and improve processes for a very automated business system.
  • Quality. Since bots conduct tasks very effectively and minimize errors, your business can see savings if quality is improved. Use cost per error and errors per hour as means for coming up with quality savings.
  • Productivity. This refers to the number of employee hours that are replaced by a bot can be aligned with other relevant business activities.

Investment

A Program Manager at Yokogawa, an Industrial Automation firm, adds that there are also qualitative returns as well - customer satisfaction, data quality, and increase in task volume completion.

How to measure RPA success?

Gabriel Bold talks about measuring success by measuring the "benefits you are looking for", which one could infer more quantitatively matches the metrics that were used in calculating your savings and investment (as shown above). For example, if you think you should see efficiency or productivity gains, you should measure those areas to ensure the RPA implementation and processes are yielding the benefits you're expecting.

Sabrina Mahmood mentions measuring success at a much higher level - cost savings and efficiency savings.

Guest
1515 Answers

author avatar
Top 20Real User

When it comes to measuring RPA 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. Based on my novice experience of RPA, I feel that RPA success can be measured in two different ways: cost savings and efficiency savings. Most companies typically focus on the monetary savings of projects as a way to add value, which is valid. However, efficiency savings is also a major part of RPA that should not be discounted simply because it does not result in cost savings. If processes, short or long, 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. This process could be a one hour process and may cost more to set up the bot but the end result in efficiency savings is much greater. There are many scenarios similar to this in which the focus should be more on efficiency than cost savings in my opinion.

2019-07-12T21:29:06Z
author avatar
Real User

Please see a snapshot of my ROI & Automation Index Calculators.

1. Firstly you will have to assess each RPA case through a lens of Automation Index measuring key KPI - Automation Focus, Productivity, Quality, Cost, Process Optimization.
2. Please refer to this screenshot of Automation Index Calculator: https://drive.google.com/file/d/10mg7nk-NcepzALBXLwT_ls7MDA-TzysO/view
3. It helps calculates Suitability Index, Ease of Implementation & Business Impact, Once the case is in a sweet quadrant it qualifies for Further development.
4. ROI Calculator is pretty much straight forward all about $$ number and how fast you could recover the invested cost - PFB screenshot for reference.
5. ROI Calculator Snapshot: https://drive.google.com/file/d/1aNFs_nQCTfgP9ZygbjbmssM5C1nymMYB/view

Hope it helps :), thanks

2020-06-13T00:17:11Z
author avatar
Real User

ROI Analysis is conducted when creating a business case for RPA implementation and is performed to arrive at CBA (cost-benefit analysis)

To arrive at ROI for RPA implementation lets follow the below tried and tested practice :

a) Total Savings as below :

1)How much manual time and efforts will be saved with the automation deployed.

Key points to be considered when measuring :

The number of processes to be automated, avg how many hours are saved daily, frequency of the process and cost per hour for the resources involved.

2) Is the output quality improved? How many errors are reduced in the process? Align cost per error to derive savings.

Key points to be considered when measuring :

Cost per error and how many errors received in an hour

3)How much is the increase in the overall gain in productivity?

Key points to be considered when measuring :

How much is the productivity increase with no of hours saved, is the resource aligned to another activity.

4)How much is the % increased in customer satisfaction and brand awareness?

Key points to be considered when measuring :

Customers lost, decrease in lost sales, NPS score.

5) Is Business agility being improved?

Key points to be considered when measuring :

Improved margins.

6) Improved regulatory compliance and data governance.

Key points to be considered when measuring :

Process conformance, audit nonconformity reduced, documented process, reduced waste in process. [ 7 MUDAS as per lean ]

b) Total Investment includes: RPA software procurement cost annually + Annual Maintenance + Experts training and or implementation cost + IT infra cost + IT software cost [eg: process mining software, visio, any third party software required ]

== Add the above savings [ a ] for one year and deduct the Investment cost [ b ] for RPA implementation for a year to arrive at ROI.

2019-07-16T06:36:54Z
author avatar
Vendor

I would say all of the above plus extending the life of legacy systems, such as bank back office systems which hold critical data and with RPA can now easily connect to modern front office systems.

2019-07-08T07:55:07Z
author avatar
Real User

I had the opportunity to speak at an RPA vendor event and this is what I said:

Each RPA processes may have these quantitative effects:
- Reduction of manhours (obvious!)
- Reduction of Total Throughput Time
- Increase of frequency
- Increase in volume
- Avoidance of license cost (if legally possible)
- Reduction of outsourcing/transfer to insourcing

And also these qualitative (or maybe quantifiable but costly to measure) effects:
- Customer satisfaction
- Data quality
- Reduction of human errors
- Reduction of off-office hour task
- Service quality
- Trigger for Business Process Re-engineering (BPR)

Furthermore, once you have a substantial number of processes automated, as an aggregated effect:
- Reduction of overtime work (quantitative)
- Transition to more value-added work (qualitative)
- More reduction of outsourcing/transfer to insourcing
- More Business Process Re-engineering (BPR)

2019-07-04T07:28:52Z
author avatar
User

ROI calculation based on the below parameters:
1. The total budget for development and implementation of RPA
2. Percentage of automation of the process
3. Expected effort savings based on point 2
4. Actual effort savings post implementation

These are very standard parameters to come up with ROI but there are other factors that depend on actual process and environment which help to come up with actual ROI.

2019-07-03T12:45:55Z
author avatar
Vendor

AA and UiPath are generally known as desktop tools which allows them to provide value for individuals. I would consider them more of a personal productivity.

Blue Prism is an enterprise tool. We offer connected RPA, which means it’s centralized. It’s IT governed and business-led. Our digital workers are similar to any other outsourcing engagement, except our DWs never get tired, they never get sick, they are never late, they never complain, they never harass anyone, they don’t need benefits, they don’t need OT, they can work 24x7, and they make virtually no errors. One digital work can do the work of about 3-4 physical workers for a fraction of the cost of a physical employee.

Here are some case studies:

https://www.blueprism.com/resources/case-studies

The key is to have a plan to transform your organization. For example, we recommend the best practice known as our Robotic Operating Model (ROM).

https://www.blueprism.com/resources/blog/delivering-rpa-at-scale-via-blue-prisms-robotic-operating-model-rom-7-steps-to-success

This process will help you identify the right processes and implement the Digital workers in a way that minimizes disruption and increases the probability of success.

2019-08-01T15:47:40Z
author avatar
Top 5Real User

To be precise, if we go for Accounts book formula:

Return On Investment = (Net Return on Investment / Cost of Investment )* 100

For any Business/Organisation the intent of using RPA is Process Optimization which in turn provide the ease of work & even reduces the cost and efforts.
The first criteria are always the cost associated before and after Implementation of the RPA.
It should be YOY basis instead of months/quarters.

The second criteria is obviously the "Experience enhancement for employees". Though all RPA Tools and RPA leaders emphasis on Employee engagement in useful tasks, But before Implementing RPA, One should be very clear about how they utilities their employee caliber w.r.t productive work.

If we follow the above-mentioned thumb rules then will automatically achieve the other benefits like:
- Customer Delight
- Revenue
- Employee happiness Quotient
- Revenue
RPA with AI will soon disrupt the overall ROI Calculation. So be ready for that.

2019-07-04T10:21:01Z
author avatar
Real User

It seems debatable for RPA ROI to win-over the cost reduction scheme in the country where the cost of wages is still lower than the yearly subscription of the RPA package.
However, in terms of Compliance, Ratio of Human Error elimination, effort saving time after implementation and reliable of resources can be pointed out as RPA ROI.

2019-07-04T09:53:09Z
author avatar
Vendor

In addition to the article Nick shared, here is a post on the specific metrics you should be looking at (several cover the areas asked about such as compliance, employee experience, customer experience, etc.): https://www.uipath.com/blog/how-to-measure-rpa-performance

2019-07-03T21:33:28Z
author avatar
Top 5Real User
2019-07-03T18:30:00Z
author avatar
User

The ROI should be calculated based on the benefits that you are looking for on this technology because you should probably get more than one benefits automating process so you may need to first understand what you're looking for this.
For instance, if you are automatizing a manual process that has a high probability of having error on the outcome of this due to manual processing or human error and this has a huge impact on another internal area such as a production line of manufacturing in which an error during this process could lead to stopping the production line. Therefore you may consider what could be lost in this scenario and compare this with the implementation cost of the technology and you will get the ROI of this automation. This could be similar if you have to comply with SLA in which not meeting it you could loose a client so then you will loose income .

There are many ways to estimate the benefits of implementing this technology and you could calculate all of them or just the ones you consider are meaningful related to what you're looking for.
The general calculation, of course, is based on the investment needed to implement the solution compare with the savings that you will get after in a period of time that you.

2019-07-03T13:41:53Z
author avatar
Vendor

Pundits, technicians and certainly sales will have all sorts of time and process block removal diagrams, studies, charts and bullet points.

Ultimately it’s about consistent process performance. You want the same outcomes in your repetitive tasks. Often RPA helps to not only remove the robot from human activity but to identify your actual processes and course correct for consistent conformance to the why of the process.
Your process is not always congruent or valued as the competition or peers or other organizations. Any analysis needs to be about your own process and organizational mission. Certainly, there is a need for meeting customer goals and organizational goals. On the customer side robotics can deliver consistent delivery. For the organization, it leverages compliance to internal and external needs while also freeing the human resource pool to provide higher level tasks not so easily handled by digital workers. This is more fulfilling for the employee and provides better engagement to the mission.

The ROI is a mix of cost savings and intangibles. It’s not about swapping human worker heads for digital workers but rather finding the workload balance for consistent and necessary process performance. If you are looking only at fiscal ROI you have missed the opportunity around process improvement and employee/customer experience improvement.

Ultimately the valuation of RPA is a localized story about
UX + CX + Process = Mission.

Monetary performance does not equate to long term customer retention. We are living in the age of the customer and they can vote with their feet quickly. Organizations need their customers or their existence is fleeting.

2019-07-03T13:30:34Z
author avatar
Real User

Typically ROI is calculated based on AHT - average handling time reduction and hence Opex saving based in man-hour reduction.
If a process is changing frequently it is not a good candidate for RPA.

Ideally one should try to move from RPA to API or microservices architecture or cloud-based technology to reduce license cost consumed in RPA.

2019-07-04T08:01:53Z
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