“How do I make the business case for automation?”

By Katie Sotheran

Much has been written about the benefits of automation, and the challenges of monetizing those benefits are becoming well known. For example, organizations are using robotic process automation (RPA) to automate tasks and reduce human effort. In theory, this gives people time back, which they can spend on value-added work. However, building a business case from those kinds of productivity gains can be challenging, and it misses the larger opportunity to truly transform the way work gets done.

When building a business case for automation, the benefits can and should go beyond cost takeout. An initial reduction in operating costs is a great start, but this can only be realized once. When automation drives growth (for example, through revenue expansion or customer retention), the benefits continue to accrue. Therefore, identifying the ways in which automation can generate or enable new revenue or improved cash flow is an important exercise.

Having said that, it often makes sense to look for simple cost-takeout benefits from productivity gains as a first step. It’s the most easily understood benefit, and the simplest to track. As a result, it can win hearts and minds and help an automation program become self-funding.

So, how should you start to build a case?

1. Establish a baseline.

Consider the existing costs and benefits generated by the workflow. The cost could be primarily headcount. For larger teams, you might consider the cost of space, licenses, hardware and so on. From a benefits perspective, does the workflow directly or indirectly generate revenue for the business, or does it have an impact on, say, cashflow or customer retention? 

When establishing a baseline, it’s important to consider the “dark process” activities (undocumented coping or workarounds) that the team has tacitly developed. These workarounds can accelerate or hinder benefits realization.

2. Identify quick wins and easy-to-measure benefits.

Selecting processes and technology that can deliver early results can be challenging — and ensuring you have the right stakeholders who will be early adopters is a task that’s equally as important.

Here are some considerations to help you identify quick wins and easy-to-measure benefits:

  • As alluded to earlier, your simplest benefit calculation can be time saved. In practice, saving partial FTE is hard to monetize. Consider an initial optimization of the workforce, using a hybrid human-digital team. As you free up some of the work via early automation, the team can start innovating on the process for a more transformational process redesign. 
  • Consider what that time saved can deliver – and think beyond cost takeout. Are you freeing up resources to deliver greater throughput or reducing the time to market for a key revenue-generating product? For example, executing the invoice-to-cash process faster and more accurately will save some people time, but it can also improve the days-sales-outstanding performance, impacting capital expenditure, which will likely exceed any savings in labor costs. Or think about the benefits of reducing manual errors that may be causing rework or liability.

3. Iterate and expand.

It’s important to measure the performance of your automated process on an ongoing basis. Review that performance against the KPIs you identified. Track and celebrate the benefits. Use success as a door opener for opportunities to expand into adjacent domains.

4, 5, 6 … and beyond. Scale and transform.

Those first three steps should be enough to justify, and measure the success of, a fairly straightforward automation deployment. As your initial automation deployments prove their tactical worth, you’ll be ready to scale.

At this point, the business case becomes more complex – and more compelling. Now you’re ready to reimagine workflows and design a new digital workforce to execute against them. This is no longer about incremental productivity gains. It’s about an entirely new operating model. And that’s a topic for another article.

If you’d like to read more on this topic, get the Forrester report: Automation, AI and Robotics Aren’t Quick Wins -- You Can Derive Value Today, But You're Really Investing For The Decade-Long Journey

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