The RoI paradox: Key considerations to ensure a higher RoI on your automation initiatives?
As enterprise automation projects continue to gain more traction, it is becoming very crucial to consider the Return on investment (RoI) for these automation projects. In fact, as of April 2019, only 13% of enterprises globally have scaled up on automation and only about 11%1 of enterprises have seemingly integrated the three pillars of people (P), process (P) and technology (T) to result in a higher RoI on automation.
Digital transformation is a no more a matter of luxury, in fact it is a matter of survival2 for enterprises, and unfortunately, successful digital transformation is not possible without adoption of digital technologies.
Let us specifically look at two of the most talked about digital technologies today, i.e. Robotic Process Automation (RPA) and Artificial Intelligence (AI). According to Deloitte’s third annual RPA survey, 53% of enterprises are beginning their “RPA journey”, and amongst those who are implementing RPA now, 78% plan to invest even more in the next three years. AI implementation, on the other hand, by enterprises expects to boost productivity by up to 40%. With these statistics, considerations and conversations on RoI are bound to be of paramount.
Based on the scale of adoption of RPA & AI, enterprises can be demarcated into any of the following categories:
[1] https://www.horsesforsources.com/rpa-dead-integrated-automation-platforms_041519
Figure 1: Classification of enterprises basis strategic & tactical considerations
Figure 1 represents the breadth of addressing strategic and tactical considerations on the Y-axis and percentage of probability to envisage higher RoI on the X-axis. The probability of envisaging right RoI from automation is directly proportional to the number of considerations addressed, the higher the number of strategic and operational considerations addressed correctly, the higher the RoI on automation.
The integration of automation, with the key pillars of people, process and technology is paramount to ensure a higher RoI on deployed initiatives.
Automation today is beyond RPA & AI, to include other technologies such as Blockchain, Virtual reality, Internet of Things (IoT) etc. Thus RPA & AI cannot be looked at in isolation and they can be linked thus by using the “AND” logical operator. It is thus not only about Robotic Process Automation or Artificial Intelligence or Machine Learning but is also about using them in conjunction by using the AND operator, so that it becomes RPA AND AI AND Blockchain AND Machine Learning AND Analytics and when all of these are integrated, RoI calculations become even more complex.
Let us try to address some key considerations for ensuring a higher RoI on RPA & AI. These considerations can be rightly classified as per priority of enterprises into two categories, that is, strategic and tactical. While strategic considerations are at the forefront of automation initiatives using RPA and AI, there is an equally important set of considerations that need to be examined, as these are fairly tactical.
Some of the indicative strategic considerations could be:
Some of the indicative tactical considerations could be:
Enterprises shall ensure a balance of strategic and tactical considerations that are to be addressed for envisioning holistic return on their digital and automation initiatives. Let us further plot some of the considerations in a matrix format:
Figure 2: Strategic & Tactical considerations on automation for enterprises
In Figure 2 The Y-axis talks about the number of considerations (strategic & tactical) that enterprises need to consider with a varying degree of Low, Medium & High. The number of considerations is classified as High, Medium & Low indicating the range of considerations that enterprises should examine while deploying automation. While around 26 considerations are listed in the figure low number of considerations are defined as enterprises executing up to 30% of the considerations correctly, medium being defined as 30%-50% and medium-high would be 50%-70% and high would be enterprises addressing >70% of the considerations in a correct manner. The X-axis talks about a range of tactical and strategic considerations in no particular order of priority or hierarchy as all strategic and tactical considerations are to be recognized and addressed together.
Considering the relatively lower penetration of AI and RPA globally (<20% of enterprises), enterprises that are able to recognize and address at least 70% of all considerations put together, are likely to get a higher RoI and have been classified as “Early Adopters”. Enterprises getting 50%-70% of considerations right have been indexed as “Initiators”, the ones addressing 30%-50% are labelled as “Followers” and the rest of enterprises addressing <30% of considerations as “Laggards”.
If enterprises have answers to at least 70% of the considerations, there is a high probability that they will realize high ROI from their automation initiatives because they are already on the mode of implementation.
As humans, the value created via automation initiative deployed is also increasingly measuring stakeholders at enterprises. Enterprises are talking about benefits such as up to 50% improvement in transaction processing time, up to 30-40% decline in headcount, 100% efficiency in transactions or improved workforce productivity by 30-40%. The higher the number of strategic & tactical considerations addressed correctly by enterprises, the greater is the probability for ensuring a higher RoI on automation.
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Mehul Damani
Digital Operations & Platforms, Enterprise Operations Transformation, Wipro
Mehul is a seasoned digital and automation leader with 12 years of rich exposure dealing with CXO level clients, across Fortune 100 organizations and business domains, such as digital transformation, customer experience enhancement, business strategy, B2B/B2C consulting, marketing, and pre-sales & sales enablement operations.
