August 08, 2023
Most businesses that invest in robotic process automation (RPA) have high hopes for their new software. They’ve been struggling with time-consuming menial work, repetitive tasks, inefficiencies in their workflows and revenue cycle, or multiple systems that don’t “talk to each other.” All of these can decrease productivity and cause headaches when you’re trying to move your business forward and reach specific goals.
Just like with any investment, you want to ensure that RPA is solving your problem and providing a return on investment for your business. One of the biggest benefits of RPA is that, when done right, it has a quick ROI. According to McKinsey, RPA can offer anywhere between 30-200% ROI in its first year alone. But how do you measure RPA ROI if it’s not directly tied to your revenue generation?
That’s exactly what we’ll teach you in this blog. We break down the steps to measuring ROI into two phases: pre-implementation and post-implementation.
Many people think measuring ROI is all about the results you track, but the truth is there’s a lot of work required before the implementation of RPA software to accurately measure its return and benefits. In general, there are three things everyone needs to do before they implement RPA in their business.
Establish Your Goals
The only way you’ll truly know if you’re getting a good ROI for your RPA solution is if you know what you’re looking for. You have to establish expectations for your RPA technology to determine if it’s successful or not. A helpful place to start is to consider what your pain points are, then set benchmarks accordingly.
Maybe you’re trying to avoid hiring additional staff in the future. Or perhaps you want to scale your company faster, decrease human error rates or improve your compliance. The options are endless! What’s most important is that the goal is meaningful to you and the organization.
When we talk about ROI, there are two main categories it falls into — “soft ROI” and “hard ROI.”
Soft ROI refers to the things that are often more qualitative than quantitative (although they certainly can be quantitative as well). Examples of soft ROI include employee satisfaction and retention and error rate reduction. These have an impact on the success of your business but are indirectly related to a dollar amount or number of hours.
Hard ROI is a more measurable, quantitative ROI. It’s identifying that you are saving “x” amount of dollars or “x” amount of hours with the selected process.
Some of the most successful RPA implementations are with clients who have a clear understanding of both the soft and hard RPA ROI they’re looking for.
Determine Success Metrics or KPIs
With your goals in mind, you can decide which metrics or KPIs will give you the best picture of success. It’s important to determine these pre-implementation because you’ll need to track the same metrics consistently post-implementation to get an accurate picture of your software’s performance.
Start measuring your robotic process automation bots with the same KPIs that you measure your team on. This will help you see if the bot is outperforming your team and helping you reach more ambitious goals.
Remember that metrics and KPIs don’t have to be quantitative. Think of ways to measure your soft ROI goals too. You can use measurements like customer or employee satisfaction, perceived ease of use scores, or even just attitudes toward certain workflows as a baseline measurement.
A simple example of meaningful hard and soft ROI metrics comes from a financial services client. They had many employees frequently working weekends to catch up on backlogged credit dispute verifications and avoid compliance infractions. We helped them implement an RPA solution where the bots take care of 75% of the work on a verification.
Hard ROI metrics included a 70% increase in processing speed and a 65% increase in throughput rate. Soft ROI metrics included the backlog being reduced by 73% and those employees are now happy to have their weekends back!
Gather Baseline Metrics
Next, you need to get the “before” picture in place so that you have something to compare results against. Ideally, you should gather information about all the metrics you plan to track post-implementation. That way you can clearly see the impact RPA has made. Look at how your employees are currently performing and use that as your baseline, then see what the bot can do.
Remember that baseline metrics won’t give you exactly an apples-to-apples comparison because a bot can work 24/7. Expectations for a human are different, so keep in mind that a bot’s metrics should be orders of magnitude larger. It’s also helpful to consider forecasting for growth that you potentially want the bot to handle. As your bot continues to run, you can start to compare its performance against itself and continually reset your baseline.
After your RPA software is developed and implemented, you can start tracking its success within your organization. We assist our clients in compiling custom reports based on their selected KPIs to ensure that we’re tracking the goals that are important to you.
The exact areas you measure will reflect your specific goals for your new system, but these four are typically applicable to any business.
This metric is a bit more straightforward. What costs were reduced or eliminated because you implemented RPA?
One of our clients, a healthcare system, had multiple processes hosted by a third-party contractor and was being charged per transaction. They were paying $400,000 per year to run these processes.
After implementing RPA, they owned the processes and no longer paid the per transaction charge. Now, instead of paying $400,000 per year to run these processes they just paid an annual license to run the bot.
In addition to current costs being reduced, there is also the benefit of future cost avoidance. As your business continues to scale, the bot can handle the increase in transactions so you don’t need to hire and train more full-time employees to handle the increased volume.
Your workforce is a significant cost, and by automating a business process instead of requiring employees to do it, you save time and money. Robotic Process Automation can help with cost savings on labor and all that’s included (salary, benefits, training/onboarding, etc.)
Hours Back to Business
Hours back to business is a measurement of how much time people can spend on core or revenue-driving activities instead of the menial processes that your RPA now runs. This shows you the value of your RPA in terms of productivity.
A huge upside to automation is that you don’t have to lay off employees after automating manual processes. Instead, you can upgrade them to more strategic work that’s more valuable to the company and more fulfilling for the employee. Think about what you are going to use those newly gained hours on. What value does that have to the company?
When employees have time to do their jobs well, they’re often much happier in their roles. If one of your goals for RPA was to make your team’s lives easier, then measuring employee satisfaction is a great metric to show qualitative ROI.
Look at positions that have a high turnover rate, and determine if the cause could be due to redundant, repetitive tasks that could be automated instead. As you gain a thorough understanding of your employees and their needs, you’ll be able to identify the ways in which RPA can make their work less menial and more meaningful.
Lastly, if your RPA is designed to help you streamline or otherwise improve your customer experience, customer satisfaction is a key success metric to measure.
Customers’ experience with your company can be greatly enhanced through seemingly simple improvements such as reduced backlog, increased throughput time, paying bills faster, and more. Remember that your customers are both internal and external. RPA can help the different organizations in your business support each other more efficiently.
Happy customers make loyal customers, so you want to ensure your RPA is creating the positive experience you hoped for.
When Will I See a Return?
Some RPA measurements are immediate, such as reduced costs of other platforms and hours back to business for your employees. Our clients typically see returns in 6 months or less! RPA is a quick ROI investment, which is one of the reasons it can be so powerful.
If you’re not getting a return within the first year, it’s likely that you’ve chosen the wrong process.
To learn more about choosing high-impact processes, read our article about selecting the right candidates for RPA.
Invest in Better Processes
RPA can help you save time, money, and headaches in your business. To ensure it’s giving you the best possible results for your money, be sure to set goals and success metrics ahead of time, then track performance after implementing RPA in your business.
At EnterBridge, we can create all kinds of RPA software to solve any business problem. Reach out to us to learn more about how we can help you start your digital transformation.