There’s no doubt that RPA has been able to deliver significant value to organizations over the years. The kind of impact that RPA has had is well illustrated by the kind of growth that the RPA market has seen. As per a recent study, the RPA software market grew by 63.1% in 2018 and 62.9% in 2019 as compared to modest growth of 13.5% and 11.5% for enterprise software market as a whole1. Moreover, the RPA market is well poised to reach USD 25.66 billion by 20272.
Organizations of varying sizes and domains across the world have embraced RPA with open arms leading to such impressive growth numbers and projections. To derive maximum ROI out of an RPA program, it is important for business leaders to consciously recognize the kind of value that they expect from it along with the investments that would have to make.
Benefits Derived from an RPA Program
Year after year, we see a huge jump in the number of enterprises selecting automation software to kick start their digital transformation journey. Analysts predict, almost 85 percent of large organizations would have implemented RPA in some form by the end of 20223. This says a lot about how RPA is benefitting enterprises globally. But, how do enterprises measure the success of their RPA implementation?
The value generated from an automation program is measured and tracked with the help of a variety of metrics:
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Employee productivity
A business process as a whole can be considered as an aggregation of multiple smaller processes including tasks that are highly repetitive & mundane and tasks that require higher-order cognitive skills. RPA is powered by a digital workforce consisting of software robots, which can very efficiently perform the mundane and low complexity cognitive tasks such as data retrieval and entry. This helps save a lot of person-hours. Once the mundane tasks are automated, employees can focus their energies onto the tasks that require critical thinking and empathy such as decision making and customer interaction. Thus, not only does RPA enhance employee productivity but also contributes to employee delight by freeing up their calendars.
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Improved Compliance
Organizations especially banking & financial institutions are confronted with stringent regulatory compliance standards. To comply with the regulatory standards, rules must be followed every single time without any scope of negligence and laxity. The digital RPA workforce can perform a specific task in the same manner without any distraction or discretion repeatedly for eternity. Along with performing the task with utmost consistency and accuracy, it also maintains a detailed step by step log for audit purposes, which makes it the technology of choice for organizations from a compliance perspective.
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Enhanced Customer Experience
Customer service is one-of-the-key touchpoints that help organizations maintain a strong relationship with their customers. To ensure a great experience and higher satisfaction for customers, employees need to perform their tasks effectively. While employees can focus on solving customer problems and managing the relationship with their critical thinking and empathy, the digital RPA workforce can take care of standard repetitive tasks such as log-in, data search, data retrieval, and data entry for multiple applications thus ensuring speedy and accurate task completion. This team effort of human and digital workforce ensures that the customer gets the best possible experience.
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Innovation
RPA enables organizations to be innovative in more ways than one. The most apparent way in which RPA enables is by freeing up person-hours that employees can now spend on solving new problems.
Apart from providing the ability to connect to legacy applications such as Mainframes as well as to modern-day web applications, RPA also enables organizations to work with complementary technologies such as artificial intelligence, data analytics, and business process management thus opening the door for designing most innovative of solutions.
Even before a process is automated, process discovery capabilities provide an in-depth view of all possible variations of a process that already exists. Organizations can analyze these variations to come up with the most optimum process flow.
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Cost optimization
Although there are ways to quantify each of the above benefits, cost optimization is the most tangible of all the benefits that RPA can deliver. The benefit in terms of cost savings can be calculated by considering the cost factors that would have been applicable if the repetitive, mundane and low complexity cognitive tasks would have been performed by the human workforce.
The most visible cost factors that can be saved are:
- IT infrastructure including desktops, phones, etc.
- Training costs
- Hiring cost including rehiring due to attrition
- Employee wages including benefits over multiple years
Investments for an RPA Program
Another key aspect that needs to be understood to track the ROI of an RPA program is the investment that an organization is making on an ongoing basis. Following are the cost factors that are applicable for an RPA program:
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Infrastructure cost
Infrastructure costs would include fixed as well as ongoing expenditures. The fixed cost would include:
- One-time procurement cost of server machines and components in case of on premise deployments
- One-time procurement cost of robot farm machines
The on-going cost would include:
- Subscription cost for cloud storage for running server components in case of cloud deployments
- Subscription cost of cloud storage for deploying robot farms
One of the key factors that lead to cost optimization on this front is that unlike the human workforce, the digital workforce can share the same device without interfering in each other’s work and without compromising on the productivity and security considerations. It would not be a surprise if 100 digital workers work in parallel on the same laptop without interfering with each other’s tasks.
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Cost for process discovery and design
Traditionally, process discovery used to be performed by business analysts. A business analyst would meet the client, understand and document the use case in great detail, and handover the use case discovery document/requirements document to the development team. The development team would then design the process using the RPA process design tool commonly known as “Automation studio”. The cost here can be calculated as per the expenditure on human resources deployed for the above steps.
Modern-day RPA product suites have in-built process discovery capabilities that can monitor the employees in action and automatically create process flow diagrams with different variations. These process flows can be analyzed, and the most optimum flow can directly be exported to the process design tool. The development team can then review and make changes to create a production-ready process. The kind of changes usually includes adding exception handling and notification mechanisms. The in-built process discovery capability is an important factor that organizations should consider while selecting the automation software.
One key advantage of RPA is that a process can be executed by 1000s of digital workers without any training cost. Alternatively, multiple processes can be executed by the same robot without any training cost. Once a digital worker is deployed, organizations don’t have to worry about attrition, rehiring, and training of these workers ever again.
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Digital worker licenses
Digital workers or robots can be licensed on a subscription or perpetual basis. For large organizations that are in for the long haul, it makes practical sense to buy a perpetual license that puts no limit on the number of digital workers that can be deployed. As the implementation grows, more and more processes are automated over the years, and the organization can keep strengthening its digital workforce at no additional cost. For smaller organizations with a limited number of processes to be automated over the years, a subscription-based license for a specific number of digital workers makes more sense.
Another key advantage that RPA offers is the ability to scale up or down on the click of a button. Once deployed, a digital worker can continuously work throughout the day thus supporting the organization and its employees across multiple shifts and time zones.
In addition to the licensing cost, an AMC cost also has to be paid which allows the organizations to have dedicated customer support and free upgrades to the latest version of the software.
There are licensing models that allows the organizations to pay on the basis of outcomes or value delivered instead of an upfront license cost. The flexible licensing models such as outcome based pricing is one of the key factors that organizations must consider while selecting the automation software.
The method for calculating ROI for an RPA program is a trade-off between simplicity and accuracy. For example, in the simplest of calculations, organizations may only consider the person-hours saved for their employees due to RPA along with the per hour cost of employees for performing the mundane and now automated task as part of the value realized calculation. Whereas, for calculating the RPA investment, the organization may just consider the license and AMC cost for digital workers i.e. robots. While the above factors would help measure the value realized, investments made and ROI of an RPA program in the simplest of ways, organizations should not hesitate to consider any other factors that may be having a significant impact on ROI of their program.
References
https://www.gartner.com/en/research/magic-quadrant
https://www.grandviewresearch.com/press-release/global-robotic-process-automation-rpa-market
https://www.gartner.com/en/newsroom/press-releases/2018-11-13-gartner-says-worldwide-spending-on-robotic-process-automation-software-to-reach-680-million-in-2018
Dikshant Wadhwa
Product Manager, EdgeVerve
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