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July 2022

How Automation ROI Can Pay For Your Business Objectives

By Automation Initiation No Comments

The most compelling reason to introduce automation into your business is actually a hidden one: automation ROI can pay for your business objectives. Any business intending to undergo a transformation or implementation project will understand the significant costs involved. From the software costs to change management, projects like these are an expensive but necessary venture to drive growth. But not all businesses can easily fund their strategic objectives. This is where automation holds the key. This post explains how automation can be used to fund your business objectives and save you money.

Automation ROI

The core driver behind automation is the ‘Automation ROI’. This is calculated as the benefits you can expect from automating a particular process. The calculation is:

(Number of Time Process Is Run Per Month)*(Length of Time Process Runs For In Minutes)*(12/60)*(Avg. $ Cost of Running Process Per Hour)

For example, a business may have an invoice processing process that is run 60 times a month, usually takes 30 minutes, and pays staff on average $40 per hour. The Automation ROI for this would be:

(60*30*12/60*40) = $14,400

This means that by automating this process you effectively get back $14,400 per year of staff time that you can re-invest into the business. This would also not be the final-result as further ROI can be generated from automating additional processes with the spare capacity of the automation.

Funding Your Business Projects

Businesses that want to grow will typically undertake a variety of big projects including:

  • CRM upgrades
  • ERP implementations
  • Document management system migrations
  • Product research and development
  • Datawarehouse implementation

These projects will come with significant costs attached including disruption and staff retraining. Many businesses overlook these costs, and inevitably end up paying more, as these projects have a tendency to go sideways or suffer delays which ultimately adds up to wasted time and money. But, we can cleverly use the money that we have saved from automation to pay for these costs. For example:

  • Business ‘A’ wants to upgrade their CRM
  • Analysis has indicated that this project will take 3 months to complete.
  • The costs of disruption to the business, staff training and change management have been estimated to amount to $25k.
  • An ‘Automation ROI’ analysis indicates that automating the existing customer mail triaging process will yield savings of $25k.
  • Therefore, by automating the customer mail triaging process, you can effectively fund the CRM Upgrade project at no additional cost by using the savings you have made to offset the expected costs.

This is how smart businesses are approaching all their growth-focused projects – by examining where they can obtain money from within the business already and using that to pay for business objectives.

 How Do I Start Saving

To start paying for your business objectives, you have to:

  1. Outline the business objective you wish to achieve (eg implement a data platform to capture and serve financial information)
  2. Calculate the staff costs involved (eg staff will need to be involved in UAT, retrained etc.)
  3. Identify candidate processes for automation (eg processes that finance staff do and would benefit from being automated)
  4. Calculate Automation ROI
  5. Determine if the Automation ROI matches the staff costs

This method can be applied across the business and for every project. Once you get into the habit of performing the analysis, you can effectively plan your objectives and actively commence your important growth-driving projects knowing that you have secured funding to pay for the anticipated costs.

If you want to know how to pay for your business objectives, please contact us.