RPA or robotic process automation can be a great investment for your business. Since it automates repetitive tasks, you can focus on more important areas of your business. So, it sounds good in theory. But what do the numbers say?

What Is the Formula for ROI?

ROI is the net present value of future cash flows relative to the cost of the investment.

So, when calculating ROI, you must first identify the costs and benefits over time and then discount the returns to the present. Essentially, you compare your investment cost to the returns you get and then look at what those returns would earn if you invested those funds elsewhere.

What Is the ROI for RPA?

When it comes to rpa Software, there are all kinds of ROI formulas and methods, but these don't all give you comparable results. Most of the formulas you will find include:

Formula #1: ROI = Net Benefit ÷ Total Cost

Formula #2: Net Benefit = Total Benefit - Total Cost

Formula #3: ROI = Benefit/Cost

To be clear, all of these formulas are similar, but they yield different results, making it difficult to compare.

If you want a thorough analysis of your RPA investment, you must choose a formula that measures the cost and benefits from budgetary and financial perspectives, as well as a human capital perspective.

RPA Calculation

ROI for RPA: How to Calculate

Formula 1

The total cost of hardware is the capital expenditures (CAPEX) you'll need to pay now. The hardware cost of an RPA solution will depend on the size of your company and your RPA solution.

If you use a cloud-based RPA solution, you need to count the costs of your internal data center, as well as any IT support or consulting fees. And if you're planning to use RPA as a recurring solution, you should also include the cost of service.

To calculate your ROI for RPA, add up the costs of your hardware and any other costs you incur, like training, and then add up the benefits you get from your RPA investment. The formula is:

(Time savings + Increased employee focus + Decrease in manual errors + Decrease in errors that cause process delays) ÷ Cost of hardware and other costs

So, for example, let's say your RPA solution costs $5,000, and you estimate your time savings will be $500,000 over the next three years. Your ROI would be:

($500,000 in time saved + $500,000 of increased employee focus + $500,000 in mistake reduction) ÷ ($5,000 for hardware + $0 for training + $0 for other expenses)

Formula 2

This formula gives you an overall financial perspective on your RPA project. To calculate it, use the following formula:

(Total Benefit - Total Cost) ÷ Total Cost

This formula will give you the overall financial position of your rpa project, including the profit or loss.

If your RPA project generates a net profit, you can use this formula to calculate the RPA ROI.

Formula 3

To calculate your ROI for RPA from a human capital perspective, you'll want to look at how your rpa software impacts your employees' performance.

You can measure the benefits of RPA by comparing:

The increase in focus employees has when performing tasks due to process automation. The number of time employees spends on a task or project. The number of time employees spends on management, administration, or other tasks.

Calculate RPA ROI 1

To calculate ROI from a human capital perspective, the formula is:

(Increase in employee focus + Increase in time saved + Decrease in time wasted on management and administration) ÷ Cost of hardware and other costs

Let's say you have ten employees, and each employee costs your company $100,000. In order to calculate the ROI of RPA for your organization, you must divide your ROI by the number of employees.

So, if you calculate that your ROI is $100,000 and your investment is $5,000, your company would see an ROI of 20 percent.

Why Is It Important to Know Your ROI?

ROI is a key tool for measuring success and making strategic decisions. When you know your ROI, you can compare similar investments in the future.

In addition, knowing your ROI can help you prioritize projects. For example, if you are considering implementing RPA, you can use your ROI data to assess whether this project will be a good investment.

Final Thoughts

RPA can help your business cut costs, increase your bottom line, and help your employees focus on more important areas of your business. It's a great investment, but only if you implement it well. You need to measure your ROI accurately and consistently.

Invest in Robotic Process Automation software from BotPath to help make your business more efficient. Botpath is enhanced Robotic Process Automation (RPA) powered by AI, Simplified with templates, and allows you to store recordings of your process. Sign up now!

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