Cost Savings or More then ROI

Do you know why vast majority of people or organizations invest in RPA projects? Actually no one has got the exact answer to this question. But mostly people / organizations invest in RPA projects for cost savings. As such taking the call whether to go-ahead and use the BOT or not is return on investment or ROI. And a positive ROI means that the cost of deploying the BOT was recovered in the saving that BOT has generated.

The issue in measuring ROI is that when we are candid with ourselves, the process of calculating ROI’s is massively faulty.  But no worry, let's try to accurately model all the costs and benefits associated with an RPA solution. One thing we should always remember that accuracy of the ROI outcome is totally dependent upon the correctness of our inputs and our expectations.  A slight slippage here & there means, the calculated ROI is often meaningless. Sometimes this factual error is accidental, but other times it is quite intentional.

While BOT's often have difficulty in creating hard dollar ROI, BOT's do provide other forms of value dramatically out of proportion to their cost.  Let's use the term ROx to describe these other “returns on”, and while their value may be hard to model in Excel, their impact can be significant. After decades of process optimization and focus on cost reduction, ROx basically covers everything that hasn’t been focused on over the years.  Let us review some of the key ROx’s that RPA delivers, and explore why they should be included in the decision to invest.

Return on Time (ROT): Return on Time is possibly the most important, least understood, and least valued benefit from RPA. While most automated processes see ROIs between 10% and 20%, most see far greater savings of time. It is not unusual to see cycle time reductions of 80% or more when tasks are performed by BOTs rather than humans. Why is saving time valuable? Speed directly impacts revenue, and if the business is reasonably profitable incremental revenue trumps incremental cost savings every time. The benefits of speed are also cumulative. The faster you go, the more business you can deliver, the greater your advantages of scale and scope and the lower your costs can become. In the digital age, time is money. With digital transformation, saving time is not just how you cut costs, it’s how you generate revenue.

Return on Quality (ROQ): The amazing improvement in process quality that companies have produced over the years has created a totally new problem: the expectation of perfection. This expectation manifests in two ways: first, customers expect everything to work perfectly, every time, and second, many organizations have sculpted away at their ability to respond to exceptions in the name of cutting costs. The result of this is that when something does go wrong, and eventually something always will, organizations have great difficulty in responding and correcting the problem.

RPA produces considerable ROQ both by ensuring that business process rules are always followed consistently and exactly as intended, and by allowing human workers to focus on addressing exceptions, rather than performing the repetition work that is instead performed by BOT’s. BOT’s get the work done in a consistent and high-quality manner, while their human co-workers deal with surprises, mistakes, or errors as they occur. Ensuring that they can respond quickly and effectively to exceptions and errors greatly improves your customers’ experience of quality. 

Return on Consistency (ROC): Since BOT’s do only what they are told, and they do so with perfect consistency, their use eliminates unpredictability that people may bring to processes. If multiple people are performing a task, there is the chance that they perform the task differently, bringing variation and the possibility of errors. BOT’s ensure that tasks are performed the same way every time. They also accept and apply changes instantly and consistently, which is particularly valuable when mistakes are discovered, or rules change.

Return on Focus (ROF): As specified under ROQ, using BOT’s to perform necessary, but monotonous work allows human workers to focus on other value-added work. This shift increases their job satisfaction, sense of worth, and ultimately their value to organization. i.e. At the accounting firm, auditors start leveraging BOT’s to perform the rudimentary tasks of audit, allowing them to then focus their time and attention on any issues found during their audits. This shift to higher-value-added work can cost-justify the use of BOT’s even without headcount reduction, a fact that is rarely reflected in ROI models. 

There are potentially other ROx’s that may be gained through bots, but those listed above should justify investing in RPA by themselves. When added to even a small ROI, these benefits can produce transformational results across business, if applied at scale. In order to convince yourself of this, these factors must be included in your financial models.

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