How to Evaluate your Automation Initiative?

June 05, 2020

Automation is a proven strategy to help organizations stay competitive, especially under the COVID-19 coronavirus pandemic. IT teams know how important it is to invest in automation, yet they might be having a hard time to justify the value of investment in automation to the management, and secure the respective budget. Let's briefly decompose the value.

The generally acceptable metric to quantify the value of an investment is the return on investment (ROI). For automation projects, the return on investment can be measured as the time saved or cost saved by automating a manual task less the amount of investment in automation, divided by the investment amount.

Return on Investment (ROI) on Automation = (Time saved / Cost saved - Investment Amount) / Investment Amount

The most straightforward measurement in an IT team is the time saved by automating a task. For example, If a complex task or process requires a junior staff to spend 8 hours each day to complete, while it only takes 10 minutes to complete with automation, the time saved from this automation initiative will be 7 hours and 50 minutes each day. In other words, it spares 7 hours and 50 minutes of the junior staff’s time for other tasks and processes. To quantify even further for the finance department of an organization, the time saved can be translated to the cost or money saved. Assuming that the salary of the junior staff is HK$ 20,000 per month, in 22 working days and 8 hours a day, the cost saved on the automation initiative would be HK$19,583.33 each month. If the lifetime of the automated task or process is 3 years, the cost saved will be HK$705,000.00, before adding the value of elimination of human errors. As long as the investment amount is less HK$705,000.00, the value of the automation initiative must be positive.

However, when calculating the investment amount, many might have ignored the support and maintenance costs, as well as the hidden costs such as training cost, management cost, governance cost, etc. during the lifetime period of the automation.

At Resolve Technology, we build everything with automation in mind. Automation is in our DNA and we believe automation can tremendously improve efficiency of an organization. Let’s share with us your workflow, and we would like to bring you this proven strategy to success.