RPA Metrics: A Guide to Measure ROI of Your Process Automation

RPA Metrics A Guide to Measure ROI of Your Process Automation

“The coolest thing about Robotics Process Automation is that you can measure virtually everything”.   

RPA is a valuable asset known for its potential to innovate, accelerate productivity, minimize costs, improve customer experience, etc. But beyond offering these amazing benefits, RPA also provides significant and fast ROI (Return On Investment). 

McKinsey Digital has found that integrating RPA in business processes can result in an increase of ROI by 30 to 200% in the first year itself. Additionally, the Institute of RPA predicts that RPA solutions can offer a quick saving of 25% to 40% in labor cost too. 

So if you want to get this level of success in your business, you need to hire RPA developers with unparalleled experience. Before you kickstart, understand what is to be considered and measured throughout your RPA journey for optimal ROI realization. 

But first thing first! 

Why does ROI Matter in RPA?

“Return on Investment” is a project’s expected profit return in terms of percentage. 

All in all, ROI is an imperative element in measuring the impact of your RPA investment with real data. Besides, by having a deep understanding of your RPA initiative’s ROI, you can: 

  • Make strategic decisions about the technology while in the planning phase
  • Improve and scale your RPA solutions for better results
  • Plan and develop support for subsequent investments 
  • Easily validate the initial investment to business leaders with data-driven proofs. 
  • Ensure that your RPA solution is performing well and delivering optimal value to your business. 

All in all, it’s important to understand that ROI is not just a final step to check off your list of RPA journeys. Rather, ROI should be a key focus during planning, integration, and governance. 

Given these substantial potential benefits, it’s fair to say that RPA is a fertile ground for hype. But, eventually, everything funnels to metrics that can help you measure ROI, calculate business profits, and finally define the answer to how much profitability RPA brings to your business.

RPA Metrics You Should Consider to Measure Success

Here, we have pocketed RPA metrics worth considering from technical and business project management perspectives. 

Let’s have a look! 

Value of Time Gains (VTG)

Value of Time Gains defines the difference between the cost of the process carried by human employees compared to the cost of the process carried by the RPA bots. 

Considering everything, VTG is the first crucial step toward measuring the success of the RPA. It can be easily calculated following the below formula: 

VTG = (EC-AC)/AC *100%

Where:

VTG = Value of Time Gains

EC = Cost of the processes delivered by employees, including taxes, costs of office and workplace

AC = Costs of the processes delivered by bots that include virtual machine/hosting, maintenance, and licensing fees. 

Let’s calculate VTG as part of the ROI for an RPA project in the banking industry. 

A bank employee usually spends 10 minutes processing loan applications – reviewing applicants’ documents to collect data from scoring systems. The task was repeated approximately 30 times a day and consumed 5 hours or 0.6 FTE. 

An RPA vendor created a bot that performed loan application processing in 3 minutes, which was five times faster and equaled 0.12 FTE. 

Here is the VTG calculation for the first and the second year of process automation compared to employee:

YEAR 1

YEAR 2

EMPLOYEE

Cost Per Year

$70,000

$70,000

FTE (Full Time Equivalent)

0.6

0.6

AUTOMATION

Software Costs

$10,000

$10,000

Service Costs

$30,000

0

Maintenance Costs

$5000

$5000

FTE

0.12

0.12

VTG (Value of Time Gain)

900%

2233%

VTG = (EC-AC)/AC*100

Putting the values, we get VTG for 1st year:

VTG = (70,000*0.6 – 35,000*0.12)/ 35,000*0.12 *100 

= 900%

VTG for 2nd year:

VTG = (70,000*0.6 – 25,000*0.12)/35,000*0.12*100%

= 2,233%

This clearly portrays that VTG is even higher in the consecutive year because there are no service-related costs. 

RPA’s ROI (Return On Investment)

Robotic Process Automation ROI is a crucial business metric that will tell you how much money you have managed to save or earn by integrating RPA into your business. 

Just a reminder – RPA’s ROI is calculated based on the Value of Time Gains.  And to build a complete picture of the ROI, it’s important to add these two factors into account:

Value of Error Reduction

One of the biggest benefits of RPA is the “Value of Error Reduction” it reduces human errors as it follows some defined rules. This brings huge relief for employees as they will no longer be spending hours resolving the errors. 

Instead, they can use those hours to work on advanced functions that need problem-solving and creativity skills. Besides, according to Deloitte annual global RPA survey, integrating RPA exceeds expectations across multiple dimensions including – improved accuracy by 90%, productivity by 86%, and compliance by 90%. 

For instance, it presents the total cost of business lost due to errors or long processing or the cost of addressing the errors manually or even the improved percentage of cases under SLA or the quality of data or anything that is crucial for the given process or organization. 

In totality, “Value of Error Reduction” outlines how much money was saved on eliminating errors in the process. 

Value of Process Acceleration 

The value of process acceleration is a term defining the difference by which the process has accelerated with automation compared to the manual task.  This difference eventually presents the actual money that was gained by integrating the automation. 

For example, this can be easily seen by the effects of minimizing the claim processing –  a difference between the number of insurance claims processed earlier and after the automation, multiplied by the average gain per client.  

Once you are done calculating the ‘value of error reduction’ and ‘value of process acceleration,’ it’s easy to calculate the ROI through the following formula:

RPA ROI = [(VTG*AC + Value of Process Acceleration + Value of Error Reduction) – AC]/AC*100%

Gained Productivity 

“Gained Productivity” is one of the most common metrics used by companies to measure RPA gains. Besides, it tells you how many FTEs (Full-Time Equivalent)  were gained by automating a given process. <introduce FTE>

 So, for example, when you hire RPA developers for automation, replacing the manual work of 4 people spending 2 hours daily on carrying the process, the gained productivity here would be 1 FTE/daily. 

Business Continuity Impact 

RPA has curated its place for its capabilities surrounding business continuity and disaster recovery, and for good reasons. Simply put, RPA helps businesses secure business continuity in two ways:

  • When Staff Fluctuations Occurs – Integrating RPA improves business flexibility by alleviating pressure on staff and freeing up resources. 
  • Maximize the Efficiency –  Companies that minimize their dependency on human resources regarding key processes usually witness a reduced business continuity risk regarding other elements. 

If you want to calculate the cost of potential downtime an incident could cause, consider its risk and what you could gain from decreasing or completely removing it. 

Hours Paid Back To Business 

Ever heard anyone saying – “RPA will take away our jobs?” Fortunately, this statement is a myth.

The processes automated by RPA rarely leave their former employee attendees jobless. Rather, RPA offers savings and time back to the business so employees can focus on delivering high-value initiatives. For example, you have a full-time resource who needs two hours every day to perform the types of tasks that RPA addresses. In a week, they are putting ten hours on those repetitive tasks. 

Eventually, that comes to 400 hours a year. But, with RPA, your team now can dedicate those hundreds of hours to higher priority tasks. Simply put, the employee spent hours attending to other valuable work. 

Improved Business Agility 

When you hire RPA developers, you eventually improve technological flexibility and save significant amounts of time for human employees. Thus, any improvement to business agility is a crucial success metric to track. 

You can find it by measuring the number of new strategic initiatives and determining their value. 

Employee Satisfaction 

The processes that RPA automates are inclined to be ones employees dread most. 

Therefore, extracting the busy schedule out of their days makes space for happier, fulfilled, productive employees. And, because this is considered a soft form of ROI, it gets trickier to measure. Still, you may observe some changes like employee satisfaction surveys, employee turnover costs, productivity, and other feedback forms. 

Process Automation Velocity 

Process automation velocity is a technical perspective to measure the success of RPA. This metric tells you the average time that is needed for a single case or task of the automated process to be completed. 

Margin of Error

It’s a crucial metric, both from the technical and business perspectives. 

Exception rates present you what the % of cases that have failed is. Precisely, there are two subcategories of errors here: 

  • Business exceptions: Missing data, case-specific problems, and out-of-scope items.
  • System exceptions: All things a robot should do but couldn’t for any reason, like change webpage layout, timeout, login errors. 

For good RPA automation, the exception rate shouldn’t exceed 20%. 

Automation Scalability 

The automation scalability metric shows how easily an RPA on a process can be scaled. It represents the cost and time needed to add new bots or upgrade existing bots to perform the given task at a larger scale vs. the time and cost needed for recruitment and onboarding of the human resources to perform the same tasks added to the payroll costs. 

As a thumb rule, if the RPA bots are written with all good practices in mind, they should be bound to scale almost quickly. 

Now, you must be wondering how to calculate ROI with these metrics? 

How to Measure ROI with These Metrics?

Calculating the hours and finances saved is the easiest and most concise way to measure performance. And, if you know how much time a person and a robot spend on a specific task, it’s easy to calculate the hours saved.  

Understanding the hourly rate, calculate the money saved. For instance, to calculate efficiency, you can use a calculator that takes into account the costs associated with:

  • Electronic document management
  • Work done by employees
  • Integration of automation

By having an insight into these indicators, the payback of the implementation can be calculated. 

However, every company has its own factors involved in the final calculation. You can use your performance data for internal accounting and justify the project’s integration into the company. 

Steps for a Successful RPA Integration 

You know what metrics to consider and focus on and how to calculate ROI from them. But, now the question arises of how to start implementing the software? And how to do it successfully?

First and foremost, you have to create a clear automation plan that should be grounded on the below-listed points: 

What are your business goals?

Look at your business strategy and focus on the objective that you want to achieve. For example, your business goal is to maximize your sales. Here, your automation strategy should focus on tasks consistent with this goal. 

Think about processes that your want to automate

Every task can’t be automated. But with RPA, you can streamline every day’s tedious tasks and save time for the areas that can’t leverage benefits from automation. So, analyze what processes can be streamlined and prioritize them. 

Ask Your Customers

Collect client stories to understand what are the present requirements of your users. It’s valuable for your business to understand your end-users clearly and see ways they benefit from RPA automation. 

Select an RPASoftware

Here, you should ask yourself and your team the following questions:

  • Will the solution work in the cloud or on an internal server in the organization? 
  • Do you want an easy-to-use platform for basic automation actions or a platform for broader business needs that can scale with your business growth?
  • How safe is the platform?
  • What is your RPA vendor’s turnaround time during the operation’s initial phase?

Finally… 

With strategic planning, delivery and maintenance, you can manifold the measurable impact that RPA will have on your business.  And, don’t let any improvement occur without your knowledge – after all, you deserve to celebrate every victory your RPA investment brings, big or small! 

All in all, by focusing on the proper workflows, understanding how to validate the advantages of implementation, and determining how the investment will pay off when you hire RPA developers, you ensure to get the most out of the technology and achieve tangible business growth. 

Frequently Asked Questions – FAQ’s

How to determine if a process should be automated?

Here are a handful of factors to help you determine if a process is the right choice for automation:

  • Employee involvement
  • Complexity
  • Volume
  • Compliance risk involved
  • Standardization and stability

Why is ROI important in RPA?

Return On Investment in RPA is essential to justify the initial investment with data-driven evidence and also to make strategic decisions about the technology while planning. Besides, it produces data for important analytics, helping to create a better customer service experience. 

How do you measure the success of RPA?

The RPA performance metrics, like velocity, employee satisfaction, improved efficiency, etc., provide a complete ROI calculation. The post-RPA established ROI, compared with the old ROI, proves to be a great indicator to measure the success of RPA.

Moreover, when a business adds new technology, RPA can automatically upgrade it. Also, when introducing a new tool, you don’t have to undergo the tiring process of re-evaluating your business model. 

All in all, your business growth is the ultimate metric to measure success with automation. 

How do you calculate ROI in automation anywhere? 

As already known, implementing RPA brings untold benefits to employees, customers, and your business. But it’s always good to have confirmation in solid numbers. 

So, to evangelize RPA, you need sound statistics and proof. Also, you should be aware of what’s working and what’s not in your RPA initiative. You can use measurement metrics given to your business. But, ensure to do it before you start your RPA implementation. Provided the initial baseline of productivity and efficiency, remember employee happiness is the first crucial step. 

How do you identify process automation opportunities?

There are countless processes throughout your organization that are looking for automation. But, not everything is a right fit. Evaluate the following parameters that will help you identify opportunities:

  • Identify which tasks of the processes can be standardized.
  • Does the process require cognitive skills?
  • Analyze whether automating the task is cost-effective based on the volume.
  • Is the process easy to scale?

Radhika Wangoo

Hello! I'm Radhika, a content curator with bespoke experience in technical writing, copywriting, articles, and website copy for global clients, covering a wide range of topics across multiple industries. I believe in redefining marketing as a measurable growth investment by creating value for businesses through better copy. I create high-quality and easy-to-decipher content that levitates clients above the crowd.

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