Although RPA has achieved phenomenal growth in recent years, many enterprises are still at the initial stages of their learning curve to start RPA implementation into their processes. ~20% of executives surveyed by IBM have yet to establish plans to retrain or re-skill their workforce to work with RPA. This is because many RPA benefits and their key metrics to measure its ROI have yet to be discussed in a data-driven manner.
In this article, we explore what RPA is and what metrics to consider to Measure its ROI.
Key Metrics to Consider for Calculating ROI of RPA
1. Total Automated Processes
This is the aggregate of all the automated processes you have in production that create your bot portfolio. This operational metric shows the evolving and growing number of RPA programs and how the team of RPA developers identifies the automation opportunities and prioritizes them through to development.
2. Velocity
Velocity implies the average time it carries to execute an automated process. This RPA metric is typically tracked because it quantifies the time and cost-saving benefits leveraged by implementing a bot to accomplish the work quicker than an employee.
3. Utilization
Utilization is how frequently an automated process is executed and when. Utilization shows if you are leveraging 24/7 bot availability, which is one of RPA’s critical benefits.
4. Accuracy
Accuracy refers to how frequently the automated process is executed with errors. This metric enables you to evaluate if your automation delivers another key RPA selling point: improved process output quality that produces fewer errors than manual execution.
5. Break-Fix Cycles
Break-Fix Cycles describe how many times an automated process breaks and requires maintenance. Bots breaking down directly affect RPA ROI. After all, the bot out of production and not performing is eventually not reducing costs or contributing to increased operational efficiency.
6. Break-Fix Person Hours
Break-Fix Person Hours enables automation teams to understand how long it takes to correct a broken bot. This automation metric indicates how much manual effort in FTE hours is invested in fixing the bot.
7. Break Root Causes
This metric enables assessing why bots are breaking in the first place. In addition, it lets you identify gaps in your automation practice that prevent you from scaling and maximizing your RPA uptime to yield maximum returns.
8. Average Automation Uptime
Average Automation Uptime demonstrates how constantly your bots are available to perform the tasks they were designed to do. It’s a measurement of a bot’s capacity to add value to the expected business success at all times.
9. Expected Business Value
It is an essential RPA metric that consolidates all the other KPIs. In simple terms, it is the sum of all the cost savings accrued from utilization, increased velocity, and enhanced accuracy multiplied by the FTE cost over a given period.
How to Calculate ROI?
To calculate the Cost of RPA Automation, you need to follow the following formula.
(Hours Spent on carrying out the Process Manually * Cost of Manual Labor)
No matter if you implement RPA as a service or by licensing the technology, RPA ROI should be measured weekly or monthly but never in years! Commonly payback time for RPA projects is around 3 to 9 months. In a service model, payback time is usually shorter than when licensing the technology due to a lack of flexibility in adjusting the capacity to actual needs.
Why is Measuring ROI Key to Success?
ROI is an essential factor for measuring the result of your RPA investment with real data. By gaining an understanding of your RPA initiative’s ROI, you can:
- Explain the initial investment benefits to business leaders with data-driven evidence
- Drive strategic decisions about the technology during the planning phase
- Plan and build support for subsequent investments like expanding your RPA solution
- Enhance and scale your RPA solution more efficiently to achieve better results
- Feel confident that your ROA solution is performing effectively and delivering desired value to your company
As a result, it’s essential to know that ROI isn’t just a final step to ensure your smooth RPA journey to achieve a successful RPA implementation that delivers higher returns over time. You need to make sure you consider ROI a focused area during planning, implementation, and governance.
Frequently Asked Questions (FAQs)
What are the examples of RPA?
Here are five Real-World RPA Examples:
- Human Resources (Hiring & Onboarding)
- Finance & Accounting (Invoice Processing)
- Payroll.
- Retail (Inventory Management)
- Customer Support.
What are RPA technologies?
Robotic process automation, also known as RPA, is a software tool that enables you to build, deploy, and manage software robots to perform operations by eliminating manual efforts wherever possible.
What can RPA automate?
From reconciliation errors to data input and invoice processing, RPA can automate various operations that minimize the need for human intervention.
What are the benefits of RPA?
Below are a few RPA Benefits:
- Improve Business Data Security.
- Improve Efficiency to Generate Savings.
- Hit Accuracy Goals with Reliable Consistency.
- Seize Opportunities for Scale
- Boost Productivity Across the Board.
Which is the best tool in RPA?
Here are a few popular RPA Tools:
- Blue Prism.
- UiPath.
- Automation Anywhere.
- Pega.
- Contextor.
