RPA ROI Measurement Based on FTE
How do you measure ROI in RPA? The traditional approach used to analyze the benefits of implementing the Robotic Process Automation (RPA) technology tells us that RPA ROI must be calculated based on the number of Full-Time Equivalent (FTE) job positions that we save.
This method can be appropriate in an organization that has huge shared service centers that manage large volumes of transactions from many countries. In those cases where a big number of employees is required to complete an activity, automation through RPA is the way to go and measuring the benefits through FTE reduction is a valid objective.
But this way of evaluating RPA ROI may not be valid under different circumstances. Organizations that only serve local businesses or that don’t operate with large volumes of transactions that would require them to have more than 1 or 2 employees to complete the activity, may not see the advantage of implementing RPA if they only consider the FTE reductions. As a consequence, they may ask themselves if RPA is an appropriate technology for them.
This type of mid-range organizations or the ones that belong to a large corporation but only operate at a local level, usually have already gone through a reorganization or downsizing process that has reduced the number of employees to the point of efficiency and most probably also have gone a little further to the point of over assigning their current staff and reducing the quality of the work delivered.
In these cases, it is not realistic to think in terms of reductions in the number of FTEs required to complete an activity because those positions have already been removed.
So What Can RPA Add in These Scenarios?
A simple answer to this question is to ask ourselves if we’d like to have a couple of free hours during the day. This would be time available to complete other tasks that today we’re not able to complete, to accept additional responsibilities that we can’t take today because of lack of time, or just to think about how to improve further the efficiencies in our department and help design the organization of the future.
RPA can help in those situations where maybe we don’t save a full FTE but we can still generate a few valuable hours during the day to better complete our tasks.
So would it be possible to calculate the RPA ROI after the acquisition of spreadsheet software licenses for our employees based on the number of FTEs we will save since we won’t have to do the math manually? I think the answer is the same as to the one for the question of whether it would be possible to operate our business without spreadsheets.
The same reasoning will be applied to RPA in the near future. RPA technology can augment personal productivity and its adoption is required today to stay competitive in environments where the human resource is scarce and we need our employees to complete their assignments with the required level of quality and without being stressed and frustrated to the point of not enjoying being part of our team.
Questions on RPA
1.What Are the Benefits of RPA?
According to research conducted by Everest Group Research, these are some of the factors that have driven the adoption of RPA technologies:
- Improve the customer experience, interrupt the competition and the growth of the first line
- Laying the foundations for a broader digital transformation agenda
- Increase in efficiency and operational quality.
- Increase employee productivity and improve the experience.
- Improve governance and compliance
- Cost savings
2. Why is RPA Needed?
Of course, this provides significant benefits for companies that can drive greater efficiency, increase process speed, eliminate errors, avoid adding personnel to their departments and allow commercial users to spend more time on other, higher value activities.
3. What are the Most Common RPA Implementation Challenges?
The top 4 challenges enterprises face when implementing RPA are:
- Employee resistance and onboarding
- Choosing the right processes to automate
- Setting realistic expectations about RPA outcomes
- Choosing the wrong RPA tool
Marcelo Albajari is our Development Services Strategic Consulting Director.