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How to Measure The ROI of Workflow Automation

2How To Measure ROI of Workflow Automation

Why You Need to Know Your Workflow Automation ROIEvery expense in a company needs to be justified by the value it adds. This is especially true for IT projects. With so many technologies and solutions on the market, business leaders want to know: How is this investment going to benefit our company?

As an IT leader, your job is to go in front of an investment committee and lay out the case for increased spending. Regardless of the solutions you want to adopt, you have to be able to justify those expenses by demonstrating the ROI those technologies will deliver to your organization.

This approval process is necessary for anything requiring executive sign-off, but it’s also valuable to your own understanding of the technology you’re looking to adopt. Regardless of who is asking the question, IT leaders should have a deep understanding of the solutions they’re looking to onboard, including the full range of platform capabilities and the total value this solution brings to the business.

If the business solution is worth your company’s time and effort, it won’t be hard to build a

case for adoption—as long as you know which key performance indicators (KPIs) and other

data points can help you build your case and demonstrate ROI potential.

In this guide, we’ll identify the types of ROI a workflow automation solution can offer an

organization, as well as what steps IT leaders can take to collect and analyze KPI data to

prove ROI—and win the support of executive team members.

As an IT leader, your job is to go in front of an investment committee and lay out the case for increased spending.

The Metrics and KPIs Behind ROISPEED Effective workflow automation is all about speed: having the speed to do more, accomplish more,

and free up resources to apply to other value-added activities. The faster projects can get done,

the more your organization can accomplish.

3 How To Measure ROI of Workflow Automation

When you evaluate the speed of a solution, consider all aspects of performance. It’s not just day-

to-day operations that matter; the speed of onboarding new solutions into your company and

training employees on how to use the platform also affect the speed of workflow automation,

which is reflected in your ROI.

A 2018 report from Forrester,1 for example, cited the Decisions platform’s exclusive cloud-based

setup, as well the ease of installing updates to the platform, as workflow automation strengths

that enabled fast setup and performance for its clients. FULL-TIME EQUIVALENCIES (FTES) For most organizations across all industries, full-time equivalencies (FTEs) is the best KPI

to represent the ROI provided by workflow automation. This KPI represents the amount of

productivity, measured in units of full-time employment, that a workflow automation solution is

able to save a business.

If a company implements a solution and is able to save 50 FTEs through automation, it essentially

means that 50 employees can be reallocated or reassigned to value-added work. Increased

expenses in technology can be offset by reductions in staffing costs and/or increased productivity

in other aspects of an organization.

EFFICIENCY THROUGH AUTOMATION Automated processes, by contrast, are non-value-added work, because an employee’s handling

of those tasks doesn’t bring any more value than an automation solution. Instead, those workers

are now free to focus their efforts on projects and tasks for which automation isn’t a viable

replacement.

Speed and automation save an organization time. And time isn’t just money; it’s also efficiency

and opportunity. Workflow automation allows you to take your internal resources and achieve

more, or to do more with less.

Here are two industry-specific examples of companies that used workflow automation to achieve

greater speed of service, FTE savings, and efficiency throughout their organization.

AUTOMATION IN ACTION: HEALTHCARE EXAMPLE A medical billing company adopted the Decisions platform to assist in claims management for

a department of 50 employees. Through workflow automation processes, this company was

able to reduce that department down to five people, saving 45 FTEs for that client.2

AUTOMATION IN ACTION: FINANCE EXAMPLE A privately held bank partnered with Decisions to create a custom workflow tool to support its mortgage servicing practices. Given the complexity of the development projects as well as various compliance requirements, the company initially quoted the cost of the project at 2,500 development hours. Even with the learning curve involved in implementing a new business solution, Decisions was able to deliver a finished product with only 1,000 development hours. This resulted in a 60 percent savings on the development side. The company also reallocated six full-time roles to new projects as a result of its FTE savings.2

4How To Measure ROI of Workflow Automation

Understanding the Different Types of ROI As with any business solution, the total ROI potential of workflow automation can be

complicated. ROI comes in different shapes and sizes, and the KPIs used to identify and measure

this value are different.

Here’s a look at the differences between hard and soft ROI, as well as how to factor in

compliance and risk mitigation when evaluating ROI.

HARD ROI Hard ROI is the easiest to track and prove because it’s tied to concrete data points that are often

easy to define. This is true for workflow automation because the top hard ROI measurements are

related to FTEs and overall time savings, particularly as those time savings relate to development.

On the business side of operations, an example of hard ROI would be a business using workflow

automation to turn a 30-person accounting team into a three-employee operation, saving 27

FTEs without a loss in performance.

On the development side, a business could use automation as an alternative to turning a three-

year development process into one that is accomplished in just nine months. From scratch

development of a modern business application, to achieving the same quality of results as

what a non-automated process would deliver, this accelerated development creates its own

opportunities to take on new projects, reallocate employees, and/or consider downsizing

options—all of which deliver value that organizations can easily track.

SOFT ROI Soft ROI may be tougher to nail down with hard data points, but it’s still important to decision

makers and to your business performance as a whole. This includes KPIs such as company

morale, improved efficiency, and employee loyalty.

Though different schools of thought may have different approaches to calculating this ROI,

there’s no question that your business needs to deliver ROI in these categories if it wants to

justify significant investments into new solutions.

Where workflow management is concerned, a key example of soft ROI is business agility.

Businesses need the ability to implement rapid changes in response to new challenges,

whether it’s increased competition or new regulatory requirements. And this isn’t just

automating processes to cut down on the steps and time required to complete projects;

businesses can also use workflow automation to implement no-code changes that can

take place quickly and with fewer approvals.

5 How To Measure ROI of Workflow Automation

Similarly, workflow automation gives organizations access to a business rules engine that can

develop custom processes to handle different situations as they arise in the business. A common

example of this is initiating different workflows and tasks based on the customer segment being

dealt with. The business can make more agile

responses to customers’ needs, and customer satisfaction improves because of the quick,

personalized service they receive.

Where workflow management is concerned, a key example of soft ROI is business agility.

Establishing Baselines and Timelines for ROI MeasurementTo measure ROI over time, you’ll need to establish a baseline from which you can measure your

success, i.e., the value added by the business solution. Because the primary KPI is FTEs, the

easiest baseline to monitor is the number of people working in a given department.

As a workflow automation solution is onboarded, the job responsibilities of certain employees

will be consolidated and eliminated. Those employees will then either be reassigned to new

tasks or possibly removed through a downsizing of the department. These staffing changes

should be tracked and accounted for. You can then measure your FTE savings and compare

the results to your goal target.

In terms of timeline, businesses should expect modest gains in the early months of using

a workflow automation solution, followed by a period of more rapid FTE savings as the

organization becomes more efficient at using automation to support better productivity.

It’s worth noting, however, that the no-code development tools offered in Decisions enable

development that’s roughly three times faster during this onboarding period and five times

faster once developers are fully acquainted with the platform. On the development side of

an organization, your ROI will be measured by comparing how workflow automation

accelerates development timelines compared to traditional operations.

As a workflow automation solution is onboarded, the job responsibilities of certain employees will be consolidated and eliminated.

6How To Measure ROI of Workflow Automation

How Compliance/Risk Mitigation Affects ROIWhen it comes to managing workflows, certain businesses and industries have unique needs

because of regulatory compliance and risk mitigation consideration. This can include a need for

business solutions that account for GDPR, PCI, HIPAA, and other regulations that have a direct

and important impact on ROI. Workflow automation must deliver ROI within these constraints,

and it should offer additional data and support to streamline auditing and other processes that

may be triggered. These compliance challenges need to be considered whether you’re looking

to build an automation solution in-house or seeking out a vendor to deliver a platform that

can meet these unique needs.

How to Collect Data and Measure ROIData collection should always include IT leaders. By involving IT leadership, you can make a

stronger case to the CFO and other key stakeholders that your workflow automation is taking a

data-driven approach and focused on defining hard ROI numbers.

To create the comprehensive ROI picture you’re seeking, you will likely need to pull data from

relevant acquisition channels and poll workers for supplemental data points. This polling can be

a valuable resource when seeking to define soft ROI metrics such as employee morale. Whether

you’re using workflow automation to support business processes, in-house development, or both,

you want to use this data to create the most detailed portrait of performance possible.

Keep in mind that this data collection should start before the business solution is implemented.

The baseline data of your performance prior to onboarding is crucial to illustrating the value

generated by this new technology. You can also contrast this baseline data with the advertised

performance impact of an automation solution to forecast the type of results those business

leaders might expect.

Keep in mind that this data collection should start before the business solution is implemented.

ROI Formula: How to Calculate Specific Metrics To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio. Take the net FTE savings, for example, and divide the dollar value of those savings by the cost of the workflow automation solution. The resulting number is a reasonable estimation of the value provided by the onboarded solution.

FTE savings are determined by calculating the amount of hours saved and translating those savings into the consolidation or elimination of roles. Keep in mind that FTE savings can spill over into different project teams or even departments, depending on how employees are reallocated. For the purposes of demonstrating ROI to an investment committee, it may be worth adding up the implications of these staff reallocations to demonstrate the reach of the technology’s ROI impact throughout your company.

7 How To Measure ROI of Workflow Automation

Soft ROI metrics may require imperfect calculations. In some cases, these types of ROI can be represented through metrics that provide a general, if incomplete, representation of the value being added. Employee loyalty, for example, could be demonstrated through the company’s turnover rate among employees directly impacted by the business solution. Although employee morale is influenced by many different variables, it could support the ROI case for your workflow automation solution.

Performance metrics such as business agility are commonly emphasized among today’s businesses, but there’s a problem when it comes to calculating this metric: Even data scientists haven’t fully agreed on a formula to produce an accurate number.3 In this case, a simpler metric such as cycle time—the time required for a development project to go from start to finish—can offer similar insights in a more digestible format

How to Analyze ROI The first objective of ROI is to demonstrate the value of any investment. But once you’ve

accomplished that, there’s still value to be gained from analyzing that ROI to guide future

operations and strategies.

This analysis can also be helpful in projecting future value and demonstrating longterm

performance expectations to decision makers. When examining the first quarter of an onboarded

solution’s value, for example, it is often safe to project that increased familiarity with the platform

will lead to greater ROI in the following quarter, assuming other variables remain equal.

With this information, you can set forecasts for future ROI growth and establish timelines to hit

performance goals. Meanwhile, if certain KPIs fail to meet their mark, you can take a closer look

at how the workflow automation solution is being used and implement changes that address the

problem.

This analysis can also be helpful in projecting future value and demonstrating long-term performance expectations to decision makers.

How to Make Your Case to Decision MakersHard data is the foundation of your case. Collect as much as you can to strengthen your argument.

But remember that when you’re presenting to people, a good story is key.

Weave data into the current pain points and needs of your organization. Always connect data back to

a narrative that decision makers can understand, and make sure you’re speaking to the different interests

of those respective leaders: financial matters for the CFO, long-term strategy implications for the CEO,

reduced IT demands for the CIO, and so on.

Don’t look at your presentation from your own perspective. View it from the perspective of the

people making the decision. Assume they’re inclined to tell you no, and make a case for why

they need to say yes.

Lead Your Business into the Future Innovation often requires a leap of faith—but that doesn’t mean you can’t make a datadriven

case as well. Do your research and seek out data that supports your case for onboarding a new

business solution. When you view innovation through the lens of ROI, you ensure that your

business is making investments that will pay off in the long run.

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Decisions is a leading provider of no-code, business process automation software, headquartered in Chesapeake, VA. Decisions technology is deployed as the basis of multiple commercial applications in healthcare, life sciences, finance, logistics, and operations software. It is used directly by companies on almost every continent, ranging from mid-size companies to many Fortune 500 corporations. Contact us at decisions.com.