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Measuring automation ROI

Maximizing your mileage

Taking a strategic, holistic approach to automation ROI during the planning phases helps to build a more robust business case, demonstrating how enterprise automation can drive competitive advantage and how you’ll save money.

Automation at scale can turn leadership vision into a reality

Which sounds like a better approach?

Option A: You present your proposal for an enterprise automation program to your leadership team, focusing on the ability to lower costs and potentially headcount.

Option B: You present your proposal for an enterprise automation program to your leadership team, focusing on both the multiple benefits and opportunities saving employee time will create and also a host of other benefits of automation, including the ability to:

  • Gain better insights from data and processes
  • Achieve process excellence and consistency
  • Improve confidence in decision making, process auditability, and governance
  • Better deploy your skilled workforce and boost engagement and morale
  • Create true transformative change

It’s an easy choice—and one that’s increasingly critical for several reasons.

As the automation market matures, leadership teams are realizing that digital arbitrage and cost savings achieved through automation are just the tip of the iceberg of value realization.

As a result, business leaders are looking beyond just tangible and quantifiable ROI and are making decisions to approve and fund automation initiatives based on more holistic business cases that include additional qualitative measures of success. They are looking to automation to increase the capacity and enrich the careers of their highly skilled human capital (e.g., credentialed professionals, such as certified public accountants, or others with advanced degrees). They are also keenly aware that having employees work in concert with automation allows them to achieve greater process excellence and derive more insight and value into the organization.

How can you capture ROI to maximize the mileage of your automation initiatives?

ROI = (Gain from investment – the cost of investment) / cost of investment

Simple? Not really. It’s important to understand what the “gain” really is and evaluate it across several quantitative and qualitative measures:

Robot and human connection

Cost savings

Of course, cost savings is one logical place to start. Most organizations start by viewing automation as a pure cost reduction initiative that can achieve significant savings by reducing the time spent on highly transactional and manual tasks.

Cost savings don’t just always mean an FTE reduction. There are tangible advantages to use automation in processes to:

  • Replace and improve the efficiencies of current technologies deployed, and
  • Reduce reliance on contractors, contingent workforce, and insourcing work—currently outsourced—through work automation.

Because a license for automation technology typically costs less than the salary for an employee, the commercial attractiveness of this approach is self-evident. In fact, the Deloitte Touche Tohmatsu Limited Third Annual Global RPA survey, which attracted more than 400 responses from organizations around the world, shows that 61 percent of respondents reported their expectations of cost reduction being met or exceeded through RPA.

Consider episodic, seasonal, or incident-related work that is either hard to predict or difficult to resource. Shifting work such as claim handling, processing, and billing from contingent workers to automated processes can help organizations gain capacity and keep down costs.

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Decreased cycle times and improved throughput and productivity

Automation technologies are designed to perform tasks faster than a person can, and they don’t require sleep, breaks, or lunch—making 24x7 operations possible. Obviously, this means that by changing the nature of when and how work is performed, automation enables organizations to do more in less time. But it also delivers additional benefits in terms of human productivity and capacity.

Consider this scenario: An employee comes to work in the morning and spends the first four hours of her day aggregating information and producing a report. Then she spends the last four hours analyzing the report and defining the results. Using automation technology, the aggregation step of this process could be performed at 3:00 a.m. That way, the employee can begin analyzing the report as soon as she arrives, allowing for near-real-time interpretation of results and enabling this skilled professional to serve as a business partner and strategic advisor versus an administrator.

The result? Shorter cycle times, improved throughput, and more strategic use of human capital.

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Automation can also provide value through scalability of processes. Once a process is automated, it can be replicated across the enterprise to other areas that perform the same or similar process with minimal additional effort and cost. This can provide a tremendous benefit for largely decentralized organizations.

For example, one of our clients was performing thousands of manual journal entries per month. We helped them build pilot automation for an initial selection of those journal entries. Because the process and activities for producing the first journal entry shared 80 percent of the same characteristics of the remaining entries (including logging into a reporting database, downloading data, producing a journal upload template, and loading that template to the ERP), we were able to scale the automation across the rest of the population of journal entries.

Looking beyond the individual pilot—to each of the additional processes that the automation could be leveraged to achieve a broader scale—enabled the client to realize exponential automation ROI.

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Improved quality

Unless there is a flaw in the program (a real risk that needs to be managed), well-designed automated processes are programmed to follow rules and don’t make mistakes. Said another way, because there are no humans involved in executing the process, there’s no risk for human error. And that makes for improved quality, consistency, and reliability.

Case in point: One of our clients had a team that compared and reconciled financial statements to produce reports for three audiences: one for investors, one for regulators, and one for the market. This manual process took place seven to 10 times per quarter, with the team comparing information line by line for accuracy.

Today, the client has automated this process. It happens more efficiently, of course. But it’s also more reliable because there’s no risk of human error factored into the output. 

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Improved employee satisfaction and retention

The tasks and processes most suitable for automation are typically the one's employees enjoy least. Employees relieved of these tasks can be refocused on more rewarding and higher value activities.

Many of our clients employ very smart people with advanced degrees and high-demand skill sets. When these types of companies introduce automation, they are looking to leverage their employees’ capabilities to work in concert with automation, driving process enhancements, better operational insights, and ultimately greater value. They view automation as a way to help maximize the return on investment in their human capital. That’s a win-win for employees and organizations alike.

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Enhanced process insights

The tasks performed by automation can be monitored and recorded at each step, producing valuable data and an audit trail that can guide further process improvement and also help with regulatory compliance.

For example, we recently helped a Fortune 500 company automate their credit and collection processes. The company expected—and achieved—tangible savings. The automation enabled the team to identify then follow up on 100 percent of its outstanding receivables in one day.

But the company also further transformed its operations by harnessing the data captured by the automation. They found that they had access to new data generated by the automated process that could be analyzed and utilized to provide better insight into their customers—such as which customers had a propensity to pay late, which customers’ master data needed updating, and which customers required more proactive communication.

Now, the company is using data generated by the automated process to identify patterns and apply machine learning to make better business decisions and drive sustainable working capital improvements.

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Governance and control

Automation brings challenges and opportunities for governance and control. Automation can introduce new risks into the organization and, absent proper governance and controls can result in significant costs and diminished ROI. However, automating a process can also create better governance and controls using thoughtful and risk-aware design.

Implementing well-designed processes to govern and manage enterprise-wide automation efforts can provide big benefits. To achieve the benefits and manage the risk, a leading practice is to establish an automation center of excellence (CoE) responsible for the overall governance of the automation journey, which is an important step.

By building structure and process around how automation technologies are selected, designed, and deployed across the enterprise, a CoE can manage not only the identification of processes to automate, but also the quality and structure surrounding development and testing efforts, and the overall communication and coordination of efforts with the various stakeholder groups involved (including functional process owners, IT, audit, procurement, and business leadership).

As a result, standardized and defined processes can have built-in governance and controls checks to help improve compliance, demonstrate auditability, and produce documentation to support a variety of uses.

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The bottom line

Taking a strategic, holistic approach to identifying important value drivers for the organization can build a more robust business case. Elevating the qualitative benefits brings increased cost savings, productivity, scalability, quality, employee satisfaction and retention, process insights, and governance and controls.

After all, demonstrating how you’ll reduce costs through automation will certainly get you an audience with the leadership team. But showing how automation can drive value and enable true transformational change will get you the funding and support you’re after.

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As the competitive advantages of automation continue to expand, and the use of automation technologies becomes more common, the need for organizations to accelerate their automation programs and quickly move to scale becomes more urgent. It’s time to move into the fast lane:

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Lets talk

Valeriy Dokshukin
Partner | Digital Risk Management Solutions Leader
Deloitte Risk and Financial Advisory
Deloitte & Touche LLP

Tom Densevich
Senior Manager
Deloitte Risk and Financial Advisory
Deloitte & Touche LLP

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