How To Calculate RPA ROI Accurately?

Return on Investment, better known as ROI is an important performance metric that reflects profitability on any expenditure. Every company wants to gauge it oftenly to analyze, optimize, and improve business prospects but calculating ROI has never been an easy task for management. Especially if you want to calculate the ROI of highly technical projects like Robotic Process Automation (RPA) where gains are not straightforward. You need to take into account various things into consideration – both hard gains and soft gains to precisely calculate the ROI of RPA projects.

Here in this blog, we will take you through all those vital RPA ROI metrics that will help you in calculating ROI in RPA projects. But before jumping into the key topic, let us first understand about the world of robotic process automation to gain better insights into the subject.

Robotic Process Automation is a leading-edge technology that is playing a crucial role in digital transformation. Enterprises from across the world and across the sectors are understanding the importance of having RPA solutions for uninterrupted business growth. RPA implementation has helped transform the fortunes of countless enterprises and made their business process more efficient, easier, and profitable. It is said that if RPA implementation is done correctly then it delivers a high ROI. According to one prominent survey conducted by Automation Anywhere, the average ROI in RPA projects goes up to 250%. And when companies embrace RPA platforms using best practices then ROI in RPA projects can even go to 380%. These impressive numbers themselves tell the business value of robotic process automation technology.

It is simple but difficult to apply in RPA.

First, subtract initial value on investment with final value on investment. Divide the outcome by the cost of investment and multiply it by 100.

Simple!! Isn’t it? But it is not the overall ROI. This ROI formula can only present to you ‘hard gains’. What about intangible benefits? There are many indirect benefits that are difficult to capture or quantify but bring enormous value to an organization. Considering those vital metrics for ROI calculation is thus vital to calculate comprehensive ROI to understand the complete power of implementing RPA bots in the organization.

Before jumping to intangible metrics, let’s understand some key quantifiable metrics.

1. Automation Cost: It plays a vital role in the ROI calculation of RPA projects. Automation cost includes various things like

• Software Cost (Licence fee to use a solution)
• Service Cost (It includes workflow analysis for testing and deployment)
• Maintenance Cost (Charges for updates and fine-tuning)
• Virtual Workspace (Costs of basic supportive applications)
• Infrastructure Maintenance Cost (Electricity, Space, etc.)

2. Employee Cost: There are various direct, indirect, and other expenses involved in this.

• Direct Expenses (Payroll, Taxes, Paid Sick Leaves, Paid Annual Leaves)
• Indirect Expenses (Office Rent, Utility Bills, Phones, Furniture, etc.)
• Miscellaneous Expenses (Health Insurance, Training, Corporate Events, etc.)

3. Time-Saving (Value of Process Acceleration): Using RPA bots, you can reduce the process timings by impressive margins. In many cases from weeks to a few minutes.

4. Accuracy (Value of Error Reduction): RPA bot helps run a business operation in an efficient manner by weeding-out operational errors. Using RPA’s powerful analytics capabilities you can clearly distinguish this change.

5. Value of Time Gain (VTG): It is another important component besides direct time and labor cost savings. It is calculated with a simple formula.

VTG = (EC – AC)/AC x 100%

AC = Costs of the processes performed by bots

EC = Costs of the processes performed by employees

Considering these components, the correct formula for RPA ROI would look like this:

RPA ROI Calculator = [(VTG*AC + Value of process acceleration + Value of error reduction) – AC]/AC x 100%

Implementation of automation solutions proves beneficial to companies in various ways. Many benefits may be hard to quantify but can be analyzed precisely with a thoughtful study.

1. Employee Satisfaction: Are your employees happier? Does automation bring a positive change in their work? Conducting a survey can give you better insights. Check on employee turnover rate as well. If it comes down as compared to pre-automation employee turnover data then it suggests a positive change for employees.
2. Customer Experience: Take their feedback, ask for surveys, and check sales reports post-automation. A positive outlook on these reflects that automation helped you deliver products/services of better quality.
3. Business Agility: Check how many advancements a company made post automation roll-out that was desired as per market demand.
4. Increased Compliance: RPA helps enterprises to deliver products/services while meeting necessary rules and regulations as per industry standards. Clearance from regulatory bodies proves the worthiness of a product and cements the authority for exceptional compliance management.
5. Reduced Dependence: RPA bots can handle rule-based tasks in a very efficient manner. You do not need to completely depend on humans to run tedious, time-consuming, and highly repetitive tasks.

Calculating accurate RPA ROI is essential to either begin or continue on an automation journey. It is no doubt a complex task but with careful evaluation, you can gain the required insights to make the right business decisions. We, at Vraimatic, have a successful track record of automating business processes using leading-edge automation tools. Our experts with their deep industry insights and automation knowledge can help you find accurate RPA ROI in the most informed manner. If you still have doubts about the powerful capabilities of RPA then contact our RPA experts, they will help you understand this in the most profound manner.

Contact us to get a free RPA ROI analysis

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