An analysis is a critical part of every project; however, analysis is conducted at the beginning of a project. The best time to conduct a post-implementation analysis is after quite a few rounds of execution, when there is data available and you can start analyzing those processes — ideally after 7 to 10 days.
COE teams should make assumptions during the initial ROI and cost-benefit analysis. By performing a comprehensive analysis of existing RPA implementations, an organization can achieve additional savings in future bot deployments.
Ultimately, RPA implementation reduces the size of the workforce that is required and saves costs according to the industry-average ratios.
What is Cost-benefit analysis?
A cost-benefit analysis (CBA) is a process used to analyze decisions, based on which RPA implementation is carried on in an organization. The COE team sums the benefits of a process and then subtracts the costs associated with taking that process. Some COE team analysts also build models to carry out analysis, such as the benefits and costs associated with the implementation of a certain RPA process.
Before implementing a new process, COE managers conduct a cost-benefit analysis to evaluate all the potential costs and revenues that a company might generate from the RPA process. The outcome of the analysis will determine whether the project is financially feasible or if the company should pursue another process.
Why Cost-benefit analysis is important?
A cost-benefit analysis will drive the opportunity cost into the decision-making process. Opportunity costs are alternative benefits that could have been realized when choosing one alternative over another, by considering all options and the potential missed opportunities, the cost-benefit analysis is more thorough and allows for better decision-making. CBA is a systematic approach for estimating the strengths and weaknesses of an RPA process, a CBA may be used to compare completed or potential course of processes, or to estimate (or evaluate) their value against the cost of a decision, project, or implementation. CBA is commonly used by COE teams to evaluate the cost-benefits of an RPA process.
How is it done – capture the existing process along with the metrics, calculate the total effort (in FTE’s), calculate the total FTE savings and calculate the ROI?
Robotic Process Automation, or RPA, is a very powerful tool. However, it’s not always the best automation solution for every process, to measure RPA progress, you need to establish concrete goals and align them with metrics that you can use to measure your progress towards those goals. Measure each performance metric every month, and then total them for every year so you can get a comprehensive understanding of the pace and scale of your RPA process. With RPA performance metrics in place, you can demonstrate where RPA has its most impact, plan future implementations, and track your return on investment ROI, factors needed for ROI calculations are, robot usage, current labor costs and determine total system cost.
Full-Time Equivalent (FTE) savings, the concept is quite simple. You need to check how long it takes for an employee to complete the transaction currently, and estimate the time it will take an RPA bot to complete the same transaction. The time savings per transaction completed is multiplied by the number of transactions that will give you the figure you need.