Return on investment (ROI) is a financial metric that calculates the efficiency and profitability of a particular investment. Companies will calculate ROI to see if a project with a high initial investment cost will ultimately pay off in the long run.
Why is Robotic Process Automation (ROI) Important?
While robotic process automation (RPA) provides long-term efficiency for your business, it does require some hefty upfront costs. A study by Deloitte found that the installation cost of RPA can range from $5,000 to $15,000 per software bot. Large-scale automation projects could require hundreds of software bots, bringing upfront costs to over $1 million. Calculating ROI for automation projects before RPA implementation can let you know whether the project is worth it in the long term. Here, we’ll detail some of the elements that go into calculating ROI for robotic process automation projects.
How is Calculating ROI For Automation Projects Useful?
When calculating ROI, it’s vital to know where you can accurately quantify value. There are three key areas where your business can benefit from using ROI calculations:
Before implementation, business owners can use ROI benchmarks from other projects to build a case. By showing what the technology can deliver, companies can provide a more detailed implementation plan and ensure the project will have the necessary resources.
As implementation develops, the organization must understand the effects of the project. Collecting ROI data at this stage can validate initial assumptions and build support for the project.
Calculating ROI doesn’t stop when the project is complete. Companies should continue monitoring ROI after installing their RPA system to see if automation could benefit other areas.
What Are the Costs That Factor Into ROI?
To calculate an accurate ROI, you first need to determine the costs of the RPA project. ROI costs are divided into two sections:
Implementation costs are the total price of installation. When it comes to installing RPA software, two areas can impact the implementation cost.
In-House vs. Third Party
A significant decision that impacts the cost of implementation is whether you hire an in-house team for RPA upkeep or retain the services of a third-party contractor. Having internal expertise may result in lower long-term costs, but the cost to train them may be high. Hiring a contractor may provide short-term value, but they can be costly over several years. Deciding which solution is best for you will help determine the overall implementation cost of your project.
Front-Office vs. Back-Office Solutions
Front-office solutions are those that the customer will directly notice. Utilizing RPA to respond to customer emails is an excellent example of front-office solutions. These require effective interactions among people and tend to be more expensive. IT systems are good examples of back-office solutions; they cost less and can operate autonomously.
Recurring costs are the yearly expenses associated with managing your RPA system. Failing to monitor them can significantly affect your ROI. Recurring costs fall into two categories:
Subscription fees tend to be one of the most significant costs associated with RPA. Seeking out multiple vendors and pricing structures can help you decide which subscription service is best for you.
Calculating labor costs is especially important if you’re going with an in-house implementation team. You will need to determine the cost of training, salary, and benefits associated with hiring new employees.
How Do I Calculate ROI for My Automation Project?
Calculating ROI can be a little complicated, and there are many formulas you can use. A common approach is to compare the total cost implementation to the hourly cost you pay your employees for the task you’re hoping to automate.
How OSC Can Maximize ROI on Your Next Automation Project
Selecting the right supplier for your next RPA project can significantly impact your ROI. Oxygen Service Company supplies robotic automation equipment from some of the most trusted vendors in the industry. Our automation systems maximize your ROI by improving productivity and reducing onsite issues. Contact Oxygen Service Company today to see how we can help maximize ROI for your next robotic process automation.