This article looks at

• Steps to Build the Business Case for Automation
• STEP 1: Defining the value automation can deliver
• STEP 2: Exploring and prioritising automation opportunities
  • Choosing automation projects
  • Prioritising automation projects
    • SApplying the 80/20 rule to select automation projects
    • Pick the high-impact processes - Find the 20%
    • Examples of potential automation projects
  • Success tip
  • Give priority to high frequency or high volume activities
  • Select processes that can be automated easily
  • Go for processes that improve employee or customer experience
  • Applying the 80/20 rule to automation practice
• STEP 3: Applying metrics to automation projects
  • What metrics matter for automation projects?
  • Financial metrics
    • Return on investment (ROI)
    • Payback period
    • Net cash flow
    • Net present value (NPV)
  • Performance metrics
    • Time Savings
    • Cost Savings
    • Reduction in Error Rates
    • Uptime and Reliability
    • Employee Productivity and Redeployment
    • Customer Experience and Customer Satisfaction
    • Scalability of a Project
    • Compliance and Auditability
    • User Adoption and Satisfaction Rates
    • Automation Coverage
  • For best effect, use a mix of quantitative and qualitative metrics
• In Summary

There is no magic wand to help your business successfully complete your automation projects. They take time and come with many challenges. Before an automation project even reaches the drawing board, someone must work behind the scenes to carefully craft an effective case for business automation that can help the project gain support and approval by decision makers. In the first part of this Back to Basics series we discussed why companies automate their operations and how to begin building a business case for automation. In this article, we pick up the next steps in building a business case for automation.  

Take these steps to build a winning case for automation within your business. 

• Step 1: Defining the value automation can deliver
• Step 2: Exploring automation opportunities and prioritising projects
• Step 3: Applying metrics to automation projects
• Step 4: How to deal with obstacles, risks & challenges in automation projects
• Step 5: Making a timeline for implementation with relevant milestones

We discussed defining the value of automation in great detail in Back to Basics: Why Do Companies Automate Their Operations? 

Let us discuss the rest of the steps in this article.

Even a cursory look around your business will show that there are many automation opportunities, in every function, process and business unit. However, you need to begin the process with small steps. The big question at this stage is how to pick which automation opportunities to work on first. 

Make a list of all the automation opportunities that come to mind, function by function. Work with a multi-functional team to complete the list. Regardless of which function you belong to, every other function and division too will be able to contribute ideas to complete the list. And remember, this does not have to be an exhaustive list. This is just the beginning. 

Pareto Principle, popularly known as the 80/20 rule. To put it simply, 80 percent of results or output comes from 20 percent of effort, or inputs. Your job is to figure out which automation projects  will deliver the most results. That is, you must find the 20% processes that will deliver big benefits (80%) with automation. 

Find processes that could yield the highest level of benefits, with the least effort. Look for processes that would deliver substantial value or significant efficiency gains when automated.

Here’s how to apply the 80/20 rule for finding automation priorities:

• Pick the high-impact processes - i.e. find the 20%
• Give priority to high frequency or high volume activities
• Select processes that can be automated easily 
• Go for processes that directly improve employee or customer experience

Selecting high impact, high frequency or volume activities and relatively simple processes prove to be winning candidates for automation. So are processes that will directly improve either customer experience or employee experience. Such automations are easily achieved, create a high impact and can help convince others that automation is a great idea.

Here’s why: 

Automation of high-impact, resource-draining processes will free up valuable time of employees while reducing operational costs and improving accuracy. 

Look for processes that take up the largest chunks of time, take up the highest level of resources, or big slices of the budget. You can also pick the processes that are most prone to human error. You will likely end up with a list of manual processes with repetitive tasks that can improve efficiency, productivity, quality of work, quality of life for employees and also likely to save both time and effort. 

Think of data entry, payroll processing, inventory management or computation of statutory taxes. All of these may be prone to human error, and may result in various complications that also take up management and staff time to settle. Automating them helps to reduce operational costs. Automating inventory management can help optimise working capital management and improve cash flows as well. 

Responding to frequent customer queries (such as FAQs) can be time-intensive and frustrating for employees. Automating basic customer service tasks can help businesses deploy their customer service teams to effectively solve more complex issues raised by customers. This saves time for most customers and improves satisfaction levels of even those coming with complex issues.  

Management reporting within a business can also benefit from some automation, to speed up completion and provide analytics and visualisations to highlight information presented. Management reporting tasks—including daily, weekly and monthly reports with key performance indicators (KPI) and performance analytics, variance analyses and other comparative analyses with visualisations—can be completed soon after the end of each reporting period. Monthly reports can be ready within hours or days, rather than in weeks, as happens with manual processes. Reducing management report cycles improves business efficiency and enables agile decisions and execution. For example, developing market trends in sales, or adverse patterns can be spotted quickly, and necessary corrective action taken to address issues as they arise. 

Similarly, automating the budgeting and planning processes, with rolling forecasts, predictive analytics and real-time comparative analysis will help speed up business responses to developing trends. Automated rolling forecaststhree way forecasting and variance analyses can provide real time support for decision makers. These processes typically take a long time when performed manually. Automating them is quick and easy and doing so delivers significant savings in terms both staff time and over the long term, in labour costs.  

Taken overall, automating the finance function can deliver big impacts to a business. You may want to check out our article: Thriving in a Downturn: Automating Finance Operations for Efficiency.

Picking a small subset of processes to automate, when done carefully and effectively, can create a positive ripple effect across other areas of the business, by boosting overall efficiency and output. Small wins can also deliver inspiration and a good vibe to overall automation efforts. 

With frequent tasks, even small automation benefits add up to compounded time and cost savings. High volume tasks like customer support tickets, order processing and inventory management can be automated to gain significant results.  

Choose low to moderately complex processes, rather than complex ones, for your initial automation projects. Straightforward processes that do not call for excessive customising are good candidates. Tasks like generating invoices, and approving standard requests and sending routine email notifications—after successful customer onboarding, joining an email newsletter, or registering for product updates,— make up this category. 

Many of these simple tasks may be automated with very little effort to get quick returns on investment. The success of such efforts can be used to convince stakeholders—from top leadership to all levels of employees—that other, more complex automation projects may also be worthwhile. 

Choosing automations that will lead to smoother, more pleasing customer interactions are good candidates. So are those that make work easier for employees. Both types can deliver outsized impacts on not just productivity, and efficiency, but also satisfaction. 

Potential areas include automated customer self-service options, onboarding of new employees and order tracking. Improving satisfaction of both customers and employees is likely to lead to higher satisfaction. Customer satisfaction helps to enhance brand reputation and customer retention. Compare the benefits with customer acquisition costs for better impact. Improving employee satisfaction leads to higher retention, and better engagement.

To sum up:

• Begin by identifying the top 20% of processes that require the most resources or impact business outcomes in a big way. 
• Once you know what they are, assign ranks to them based on their volumes, complexity, potential impact, and how they could directly contribute to your goals.
• Begin automation with one or two of the high-impact processes. 
• Evaluate and quantify results. These are necessary for you to build on in creating your higher level, more complex, more costly automation projects. 

An initial focus automating high-impact, high-frequency, and low-complexity processes helps maximise automation benefits, when going by the 80/20 rule. The success of these projects and the learnings can be used to scale your automation initiatives into more complex automation exercises. 

Metrics for automation projects need to cover both quantitative and qualitative aspects. Quantitative metrics include financial metrics as well as performance metrics that can be helpful to quantify the benefits from automation. 

Financial metrics are a key element of an automation business case. Business leaders would be interested in knowing the financial metrics of automation such as return on investment (ROI), payback period, net cash flow or net present value (NPV). 

ROI quantifies the financial value of a project relative to its cost. ROI is critical for evaluating the overall success and justification of a project. ROI percentage is expressed as the ratio of net cash flow divided by the initial investment required. That is,(Gains from an automation project - Cost of automation) / Cost of Automation.