How to carry out a business automation cost benefit analysis

Posted by Allan Hendry

The rise in business automation isn’t slowing down any time soon.

In fact, more than 80 percent of surveyed business leaders say they’re increasing the number of processes they automate.

But, that doesn’t mean you should just throw yourself into automating. Your organisation must conduct a cost-benefit analysis before accelerating your adoption. In tallying up the costs and subtracting the potential business value, you’ll determine whether your ideas are worth pursuing.

To get you started, we’ve listed five metrics that’ll help you determine the value of your automation ideas.

1. Hourly wage

For this metric, weigh up the hourly wage for a task. Consider the longevity of the task, too. Is this a process you repeat regularly? If so, total the sum of wages dedicated to the task over any given period of time.

You may find automating it will save money (and time) down the line.

2. Manual time

If a repetitive, low-value task such as data entry takes an employee one day to complete each week, it’s a telling sign you need automation.

Once again, you must think broadly about the ripple effect of this time spent. If the repetitive tasks mean your employees spend less time on business-critical jobs, the ‘value’ of automating will increase.

3. Unproductive time

While this may be a controversial metric, it’s one you can’t ignore.

Your workers will not dedicate 100 percent of their time to a task. If they need to key an invoice, for instance, they’ll inevitably spend moments away from their desk to fetch lunch, attend meetings, or chat to a colleague. Outside of this, employees also take sick days and annual leave.

So, factor in this time. If an employee is efficient 60 percent of the week, you’re actually paying for three working days of work and two days of unproductivity.

4. Average mistakes

Did you know that 43 percent of employees admit to making mistakes at work that result in costly cybersecurity issues?

While not all human error causes such drastic repercussions, it can be a nuisance.

Before you decide to automate a process, make a note of:

  • The average mistakes you experience.
  • How long quality assurance (QA) takes.
  • How many complaints your company receives for these mistakes. Off the back of this, determine the volume, resolution time, and hourly wage needed to deal with them.

Naturally, the more mistakes you make and the more time you put into remedying them, the stronger your case for automation.

5. Business growth

Let’s move away from the status quo for this one. If you’re looking to scale your business in the near or distant future, you’ll want to consider the cost benefits today versus your expected growth later on.

As a topical example, many utility companies are absorbing new customers. Yet, despite the growth in customers, calls, queries and debts to chase, they still have the same number of employees. Only now they have to work twice as hard.

If you’re expecting a 10 percent growth in the future, multiple your volume by 1.1 and consider the demands on your workforce. If this growth is significant, the value of automation may well outweigh the cost.

Adopt business automation with confidence

Okay, so we might be biased. But we truly believe automation deserves all its hype.

From streamlining your processes to bringing better job satisfaction for your employees, there are a number of benefits to gain.

However, not every single automation project or idea will be right for your business. If the cost outweighs the benefits, you’re probably best sticking to manual processes. The trick is to analyse each use case and determine where automated services can make the most impact.

If you’re stuck and need support, don’t fret. We can help you determine the anticipated costs and benefits.