Discover how DHL Group increased connectivity across the enterprise and automated multiple processes end-to-end
So, you’re ready to begin a new process automation project. But first, you need to get it signed off by senior management. During this meeting, you will certainly be asked the all-important question, “What return on investment (ROI) can we expect to see from this project?” The future of your project depends on your answer to this question. So, exactly how do you calculate process automation ROI? And how do you justify your process automation project?
Organizations are increasingly allocating budgets and efforts to accelerate their digital business transformations. However, it can still be challenging to launch a new process automation initiative, especially when stakeholders are concerned about upfront costs rather than seeing the long-term value.
You need to demonstrate the advantages process automation can deliver to your organization and present it as a strategic investment, not just another IT expense. By focusing on the ROI, you’re more likely to secure the initial budget needed to deploy your new automation initiative. Then, everyone can reap the benefits once your project begins to see results.
These benefits, while harder to exemplify with figures, are not to be overlooked when it comes to reasons why you should embark on a process automation project. They all contribute to the greater digital transformation of your organization.
Enhanced customer experience: Process automation makes data available that allows the customer journey to be put into context and helps organizations to create more personalized experiences.
Greater employee satisfaction: Tasks that are automated are often those that are arduous, repetitive, and unsatisfying. Employees can be freed up to do more rewarding work, which in turn can make them more productive.
Improved process quality: Processes are planned and modeled prior to automation, which provides visibility and opportunities for simplification and process improvement.
Greater business orchestration: Process automation supports the coordination of people, systems, and information across the organization to support business strategy
Improved business agility: A “start small, think big” to process automation means the organization can deploy processes quickly, making incremental changes as they go to see impactful results, faster.
Keeping up with competition: Gartner predicts that by 2026, 30% of enterprises will have automated more than half of their operations, so it’s important to invest in a process automation platform if you haven’t already, and continue to automate key business processes to remain competitive in your market.
Benefits that deliver hard ROI, exemplified with numbers, are more likely to get people within your organization to sit up and take notice, and are easier to calculate as it’s based on real figures that you can access.
For each of the benefits below, we have included a real-world example realized by Bizagi customers:
Improved productivity: Automated processes are deployed throughout the business, alleviating workers from manual tasks, including auditing, saving both time and money.
Real-world example: DHL Group repurposes several FTEs by achieving an automation rate of more than 90% for their VAT Duty Billing process.
Overall cost savings: Monetary savings can be realized in a variety of ways, including replacing legacy systems and digitizing processes to save costs spent on paper used in both internal and external communications.
Real-world example: Old Mutual reduced operational costs of branch offices by $3 million per year thanks to reduced training costs.
Improved service delivery: By reducing cycle times with process automation, businesses can drive opportunities to up-sell, increase client retention rate, and decrease customer churn.
Real-world example: ManpowerGroup Portugal deployed process automation to deliver two times the revenue with the same amount of resources.
Read more about the benefits of process automation in our blog, Business Process Automation 101: Simplify, Streamline, Succeed
To accurately predict the ROI of your process automation project, you can take a data-driven approach that quantifies both the costs and the potential gains.
Here are five steps to help you calculate process automation ROI:
1. Identify Direct Costs: Upfront and ongoing costs include: • Technology investments: Software licenses, hardware (if applicable), and infrastructure. • Implementation costs: Development, integration, and consulting fees. • Training and change management: Time and resources required to train employees. • Ongoing maintenance: Support, updates, and potential scaling.
2. Quantify Time and Cost Saving: Calculate the tangible benefits process automation can bring: • Labor savings: Estimate the time saved on manual tasks and translate that into cost savings based on employee wages. • Error reduction: Estimate the average cost of errors and how automation mitigates them by avoiding manual errors. • Cycle time improvements: Shorter process times can accelerate service delivery and drive revenue.
3. Factor in Revenue Gains: In addition to cost savings, process automation can also boost revenue: • Increased capacity: Employees can focus on value-adding tasks rather than routine, manual work • Customer retention and acquisition: Faster, more accurate service can improve client satisfaction and loyalty.
4. Apply the ROI Formula: There are several different formulas you can use to calculate ROI, but the most basic is quite simple and effective:
ROI = (Net return / Cost of investment) x 100
- Consider the total profits received, which you can calculate by subtracting the amount spent on the project from the amount gained - Divide this by the total amount spent - Multiply by 100 to get the number as a percentage
5. Use Scenario Modeling: To strengthen your business case, create best-case, worst-case, and most-likely scenarios. This gives stakeholders a range of potential outcomes, helping them understand the risks and rewards more clearly.
To start delivering value from automation, first you need an automation platform. Look no further than Bizagi for rapid value delivery.
Bizgai's low-code process automation platform can boost enterprise efficiency by automating processes that orchestrate your people, systems, bots and data. Find out more about how Bizagi can deliver AI-powered end-to-end process automation in your organization.
