Back-of-envelope ROI for automation: a formula and a worked example

Description and use

<p>Most automation projects get approved on a feeling: "it will save a lot of time". A one-page calculation does better, and it takes ten minutes. Below is the formula I would use, a worked example, and the inputs that most often make it wrong.</p> <p><strong>All numbers in the example are illustrative, invented for the arithmetic. They are not a client result.</strong></p> <h2> The formula </h2> <div class="highlight js-code-highlight"> <pre class="highlight plaintext"><code>monthly_saving = volume × share_automated × minutes_saved_per_item / 60 × hourly_cost monthly_cost = running_cost + rev

Problem

<p>Most automation projects get approved on a feeling: "it will save a lot of time". A one-page calculation does better, and it takes ten minutes. Below is the formula I would use, a worked example, and the inputs that most often make it wrong.</p> <p><strong>All numbers in the example are illustrative, invented for the arithmetic. They are not a client result.</strong></p> <h2> The formula </h2> <div class="highlight js-code-highlight"> <pre class="highlight plaintext"><code>monthly_saving = volume × share_automated × minutes_saved_per_item / 60 × hourly_cost monthly_cost = running_cost + rev

Outcome

<p>Most automation projects get approved on a feeling: "it will save a lot of time". A one-page calculation does better, and it takes ten minutes. Below is the formula I would use, a worked example, and the inputs that most often make it wrong.</p> <p><strong>All numbers in the example are illustrative, invented for the arithmetic. They are not a client result.</strong></p> <h2> The formula </h2> <div class="highlight js-code-highlight"> <pre class="highlight plaintext"><code>monthly_saving = volume × share_automated × minutes_saved_per_item / 60 × hourly_cost monthly_cost = running_cost + rev

Evidence

Back-of-envelope ROI for automation: a formula and a worked example

Source