Calculating the Business Benefits of Process Automation

One of the pain points of Process Automation is not just the process of implementing it to begin with. There are also complexities around assessing and reporting the benefits to the business. It may seem simple on the face of it, but businesses often do not quantify the benefits in the right way. This can lead to skewed viewpoints on the true benefits of automated business processes.

Why Calculate the Benefits of Business Process Automation?

The obvious reason is for reporting. Some businesses like to keep a track of their processes and how they are performing. After all, if you cannot quantify the benefit of a new process, then why do it at all? How would you know whether it is beneficial or not?

A company needs to look at their criteria for measurement and understand what their goals are in order to calculate the benefits of automation. This ensures that resources used to develop and run automation is directed to the right place, and that the opportunities achieved from automation are maximized.

There should also be a step of recognition of benefit after the process has been automated, as well as before. This is especially the case for the quantifiable benefits mentioned later in this post. How can you possibly quantify the time benefit of automation, if you didn’t measure the time a process took to do manually?

Benefits of Business Process Automation

Types of Business Benefits

There are three main types of benefits which can be obtained from automating processes within a business. These vary in their ability to be accurately calculated and observed. In order of difficulty of recognition:

Intangible Benefits

These are the benefits that we cannot easily or directly see the benefit of. This does not mean they are any less significant than the more obvious benefits, but they are certainly difficult to report upon. For example, implementing automation into the workflow can lead to an improve brand value or customer experience. While we can do things like customer surveys, it is difficult to directly attribute the benefits of automation exactly to an improvement in customer experiences.

Another common area forgotten about is the benefit to employees, and their overall work-life balance. One of the key benefits of automation is the elimination of monotonous tasks from the schedule of employees. This allows them to have more time to focus on tasks which provide more value to the company, or need more of a human touch. It is important to note that management should make sure that employees are utilizing newly found ‘free time’ created by automation, and not using it as an opportunity to do less work. Generally, studies have shown that when you eliminate the boring tasks for an employee, and allow them to focus on more interesting tasks, their performance and satisfaction in their job will increase significantly.

Tangible Benefits

These can be easily recognizable benefits for the business. For example, an improved working capital position which has been caused by implementing automation within a business process. You can ‘feel’ the benefit. Whether that be a better balance of stock (reduction in stock holding costs), or a reduction in the time it takes customers to pay their unpaid bills.

There is still an element of inaccuracy of the calculation here. For example, customers may be paying their bills sooner with a combination of automation and other events outside the business control. These tangible benefits cannot always be wholly attributed to automation, and therefore it can be difficult to calculate the benefit with absolute certainty.

Quantifiable Benefits

These benefits can be easily calculated and attributed as a benefit to automation. 

A process previously took 2 hours, and now is automated in 30 minutes. That is a time saving of 90 minutes in total. This process runs 200 days of the year. That is a total of 18,000 minutes/300 hours/43 work days in a working year.

You can then take this a step further. Let’s assume the individual completing this process normally was on a salary of £30,000 per year. Paid for 261 days of work, at 7 hours per day. That works out as £16.42 per hour. They have saved 1.5 hours per day over 200 days in a year. The monetary benefit of this could therefore be stated as £4,926 (£16.42 x 300 hours).

In the above example, we can accurately quantify that the company is saving almost £5,000 per year on a recurring basis by implementing automation. That equates to 17% of the individual’s salary per year saved.

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