Any organization that has successfully implemented robotic process automation (RPA) understands that success isn’t dependent on technology alone. Among the many other factors to consider are the people, organization, governance, delivery, service methodology, and operating model.
Cost Saving: Basic Advantages of Intelligent Automation
The benefits associated with intelligent automation are similar. Companies often just look at the full-time equivalent (FTE) benefits and how that can help reduce costs to the business but, like the tip of an iceberg, the true benefits can go much deeper than that.
The obvious benefits of assigning typically manual business processes and tasks to digital workers are greater efficiency and productivity, ultimately resulting in work hours returned to your organization.
For instance, you may save one million full-time equivalent hours. But, now what? What do you do with those million hours? What is the real value of the FTE cost savings?
FTE savings are traditionally realized in one of three ways:
- Cost avoidance
- Freeing up human capacity
Reduction is the simplest value to calculate. For every FTE within the business who is no longer required to work on the process you are automating, you would allocate a benefit that is equivalent to the fully loaded cost. The full-loaded rate comprises every possible cost associated with an employee. These costs may include the company's contribution to the employee's pension plan, all benefit costs, payroll taxes, overtime, shift differential, and base-level compensation. The mechanics of releasing this cost from the process can be via natural attrition, transferring the role to another department, or voluntary and/or compulsory redundancy.
While the calculation for cost avoidance is similar to reduction, cost avoidance differs in that it is not yet reflected on the company’s balance sheet and is sometimes referred to as a soft benefit. Cost avoidance can be used as a hard benefit when the cost of providing the resource/infrastructure has already been accounted for in the company’s annual operating plan (AOP). It could also be acceptable to use it as a hard benefit if the business has previously had to pay for it in previous accounting years. Cost avoidance may also be used when you need to establish a new process for a new product launch or during expected seasonal spikes in a volume where you would normally expect to recruit new staff.
We often hear of companies freeing up ‘x’ amount of hours within the business. What they’re referring to is freeing up human capacity. This is where digital workers now do a portion of the work that traditionally human workers would do. This can range from as little as saving an employee one hour per week to cumulatively saving across a business, in which case it can add up to even more substantial numbers. The trouble with counting hours saved is that if you don’t calculate what is now done with that ‘free time’, you are, in fact, in danger of being challenged on what benefit has been realized.
Examples of what you might calculate:
- Reduction in overtime costs
- Upskilling people to take on alternative tasks or responsibilities, such as transformational or continuous improvement projects
- Taking on additional or new tasks
Intelligent Automation Example:
Company A was focused on reducing the cost of raw materials and increasing the efficiency of parts manufacturing by constantly monitoring commodity prices. Its catalog, which included over 20,000 parts, was updated via a fully manual process. Since this process has now been automated, resulting in human workers being freed up to focus on other things, they decided to use their time to concentrate on negotiating better prices in the first place. The results? Company A has shaved off £5 million a year from its bottom line.
So that’s the tip of the iceberg. But what lies beneath the water? Beyond FTE savings, I like to split benefits into ‘direct’ and ‘indirect.’
What Are the Benefits of Intelligent Automation?
Direct benefits of intelligent automation
Direct benefits are tangible achievements that can be directly attributed to automation and are easily calculated. For example, you may automate a process that reduces errors from 100 per day to zero per day which ultimately results in a savings of $100k.
The above is an example of both a measurable and direct benefit, respectively. Measurable benefits include:
- Accuracy and quality – Digital workers deliver consistency and can, thereby, eliminate human error. They only make errors if you have designed them that way!
- Productivity – A digital worker can work 24/7, totaling 8,760 hours per year; humans, in comparison, average seven hours per day, 20 days per month, and 11 months per year, totaling just 1,540 annual work hours.
Productivity at the scale digital workers provide is a big win. That’s five times as many hours of output! Consider the impact this might have on one or more of your critical processes. And, equally important, start thinking about how it can make a difference, either upstream or downstream.
For example, what if your human workers arrived for work in the morning and every task they needed to be completed for a productive day was already handled by digital workers, eliminating the need for a ‘nightshift’ or overtime? What if you could produce more widgets or offer customers additional services? If you produce and offer more, can you sell more or enhance your customer experience by never running out of stock? Can you distribute more and save costs and energy by being more efficient with transportation, fuel, or tolls? The possibilities are truly endless. A few worth noting include:
- Hiring and training – Eliminating the need for onboarding results in a reduction in recruitment costs, as well as the time taken from existing employees to train new employees. Recruitment costs can account for 15% of all human resources spending.
- Rework – When you don’t make mistakes you don’t have to fix them. Redoing work costs money and time. And when you don’t have to redo work, you can produce more or finish work more quickly.
Operational benefits also include shorter turnaround times, better forecasting, fewer complaints, less chasing, and risk mitigation. Depending on goals or desired outcomes, some of these direct benefits can be considered indirect, as well, depending on the particular process or the business.
So, what about indirect benefits? What are they and how do they differ?
Indirect benefits of intelligent automation
These returns can’t be directly observed, they may not be directly attributable to the automation and, most often, they are difficult to quantify. Let’s use the same example from before. If your process automation reduces errors from 100 per day to 0, there may also be a 50% reduction in complaints and your NPS score may increase from 80% to 85%. In this case, improved customer experience is the indirect benefit, but it isn't quite as easy to quantify.
The following are examples of “unseen,” indirect benefits:
- Customer satisfaction – If you can deliver products and services quicker, simpler, and without errors, it will positively impact your customer satisfaction. Customers who give higher Net Promoter Scores (NPS) ultimately bring greater lifetime value to your business. You will also experience fewer complaints and fewer customer churn and dropouts. Loyal customers will enhance your brand reputation and become advocates of your business to friends and colleagues. All of this has a positive impact on your bottom line.
- ‘Right First Time’ – This is not just about productivity and profitability (removing errors and rework). Fundamentally, it’s about delivering quality and consistency and ensuring your customers know they can rely on you to deliver what was promised when it was promised, which ultimately leads to greater customer satisfaction. This can also have a big impact on decreasing calls to your contact center as customers won’t need to contact you to chase progress or actions.
- Employee satisfaction – By automating the less-rewarding, lower-value-added processes and tasks, you can increase job satisfaction across your staff base. Often underestimated, high employee job satisfaction benefits the company and leads to improved productivity, decreased turnover, and a reduction in job stress.
- Risk Reduction Compliance – Risk impact can vary a lot. In its most basic form, the benefit can be the simplification of the process, meaning you have fewer checks and measures in the process, reducing turnaround time and removing human checks. It can also simplify the work of your audit and compliance teams and reduce the frequency of reviews. At the other extreme, it can also have a positive impact on the provision for losses and fines that result from regulatory breaches. This can be difficult to measure or predict since the fines assessed for not meeting desired standards often reflect the severity of the offense. But having peace of mind and removing the propensity for errors is always advantageous.
- Process Excellence - Not just a methodology, process excellence is about improving the way your business creates and delivers value to your customers. By freeing up human capacity, your employees can look at how to optimize the processes they work in. And you gain a whole new team that can work on transformational projects and reaps the benefits that these will bring.
To be clear, the label “indirect benefit” doesn’t necessarily mean you can’t apply a metric to it, it just means you might not be able to assign a direct, primary relationship to the reduction.
Who Should You Partner with on Your Intelligent Automation Journey?
When brainstorming potential processes, new opportunities, and the subsequent benefits that intelligent automation makes possible, lean on the creativity and insight of your colleagues. However, while the Center of Excellence (COE) may take the lead on report benefits, they are not the experts when it comes to the upstream and downstream benefits that could be impacted by automating the process.
It’s helpful to include all interested stakeholders early on to enable greater collaboration and agree on business-wide benefit categories and metrics that collectively provide a holistic view.
Include experts such as:
- Process Owners and SMEs
- Transformation and continuous improvement teams
- Finance teams
- Customer experience experts
- Marketing and insight teams
Taking the Next Steps: Getting Started with Intelligent Automation
Now that you have a better idea of the additional benefits you can anticipate, start by focusing on a few processes, using either those in your pipeline or recent deployments
Find a ‘friendly innovator’ to champion this initiative in the business, someone who will work with you to build out the additional benefits and serve as an ambassador within other areas of the business as this takes off.
Your forecasted benefits will likely start with a range and that’s fine. As with most change projects, your forecasts will become more accurate as you progress.
Rest assured that your category of benefits will grow and be refined over time as you think of more innovative ways to demonstrate benefits. It will also become easier as you mature as you will be able to re-use the same categories and metrics you have already agreed on. Embrace this organic process as part of your cultural adoption of automation. And when you communicate automation plans to the broader business, use the following channels to bring the benefits to life:
- Fireside chats
- Lunch and learns
- Business champions/ambassadors
- Internal social media
Finally, remember to look beyond the tip of the iceberg to truly realize the full value of intelligent automation.