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Building the business case for RPA

By 2018, business leaders across industries and geographies have probably heard of an exciting emerging technology called Robotic Process Automation (RPA) that is promising operational efficiency jumps, costs reductions, increased data accuracy, better compliance and automated manual and repetitive work for a fraction of the time and cost of the traditional IT technology deployments.

However, to help obtain executive buy-in, key stakeholders need to build a robust business case to demonstrate the potential gains this investment would generate in a short and long term time frame.

According to Gartner, organizations need to begin by asking the following questions:

  • What is the greatest contribution that an RPA tool could make to your organization in the next six to 12 months?
  • How could you use RPA to generate new revenue opportunities to perform activities that were previously too expensive or difficult to achieve?
  • What can better help demonstrate proof of value rather than proof of concept?
  • What are the opportunities to collect more revenue than was possible before, such as improving debt recovery, tariff compliance or tax collections.

To build a robust business case, business and IT leaders need to first understand the required and available budget within the organization, as well as the financial constraints and opportunities it may be present.

Begin by collecting the costs of current business processes to evaluate the need and prioritize the RPA investments, as well as to halt planned expenses that can overlap with RPA results, and avoid unnecessary costs.

When building the business case, keep in mind:

  • The potential for improved business outcomes that will generate more revenue
  • The ROI will be the impact of the outcomes for delivering processes automated vs the manual delivery previous to automation by RPA
  • The cost of running RPA will depend on its total cost of ownership (TCO) and its deployment strategy.

To calculate the TCO, stakeholders need to calculate in the vendor's pricing model comprised of the robot licensing, and adoption costs. According to Gartner it should include:

  1. Annual robot licenses with or without a minimum commitment, which may need to be supplemented with an enterprise server license.
  2. Robot usage will determine how many enterprise server licenses are required. Prices range from $1,000 to $16,000 per robot. Certain providers have a minimum robot commitment, typically three years, over a period of time. The amount of work a robot can perform varies, but depending on the architecture, each robot can perform the work of between two and six full-time-equivalent people.
  3. Perpetual licenses for robots plus a server license for which the usage of the robots will determine how many server licenses are required, depending on the type of robot functionality.
  4. Pay per transaction supported by a robot — for example, the number of journals posted or customer calls taken.
  5. Pay per savings achieved from the use of the tool, such as a percentage of the extra tariffs that are able to be collected or extra products and services that are able to be deployed.
  6. Pay-for-SaaS robots, including use of the bot and supporting server infrastructure.
  7. Pay for a business service, which may include RPA tools in the service.

When scaling up your RPA implementation, you can start building in the results observed during the pilot stage, using inputs such as:

  • Results from the pilot: Time and cost reduction, and length of automated process
  • Scope: Assumptions on timeline and overall benefits
  • Roadmap: High level outline of the expected benefits
  • Delivery model: Development and support costs assumptions

And outputs such as:

  • Cashflow
  • ROI
  • Total funding needed
  • Milestones
  • Sensitive variables

Below a sample RPA business plan:

RPA sample business plan

 

Final recommendations: Keep in mind that most organizations tend to underestimate the cost of development and maintenance of new technologies, as well as overestimate the expected benefits, our experts recommend stakeholders to revisit the initial business plan periodically to update the variables in the original plan to maintain the accuracy of the overall long term business case.

Need help building a robust RPA business case and secure executive buy-in? JOLT Advantage Group supports companies who are either starting or scaling up their RPA and IA initiatives with end-to-end services. Contact us to discuss how to get started on your RPA business case today.

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