Business Process Automation (BPA) has become an essential tool for organizations to streamline their operations, reduce costs, and increase efficiency. However, simply implementing BPA is not enough; measuring its success is equally important. And to get things right, you’ll need to define key metrics and KPIs that will help you understand the true impact of Business Process Automation and determine the areas for improvement.
In this blog, we will discuss the most important metrics and KPIs that any organization can use to measure the success of their BPA initiatives. You’ll also learn how to track and analyze these metrics to continuously improve BPA systems and achieve desired outcomes.
First, here’s a summary of what BPA is.
What is Business Process Automation?
Business Process Automation is the utilization of technology to automate repetitive tasks such as data entry, document organization, and information routing between parties. This form of automation greatly simplifies human-related tasks by converting time-consuming manual work into efficient processes that enhance productivity.
Modern Business Process Automation software leverages advanced technologies such as machine learning and artificial intelligence to handle complex tasks, such as capturing data directly from documents. However, it is humans who drive innovation and change. Automation simply serves as an enabler, empowering individuals to accomplish more and keep the world advancing.
Best Practices for Measuring Business Process Automation Success
Achieving success with Business Process Automation requires more than just having a vision or mission in place. To ensure that your efforts are constructive and fruitful, it is essential to follow best practices. Here are eight practices you can implement to get the most out of your automation efforts:
1. Choose the Right Process
When automating business processes, your initial instinct may be to automate everything at once, but this could be detrimental to the automation effort. It is wise to start with simple processes like:
- Email Filtering: BPA tools usually have built-in features that allow users to set up rules for filtering incoming messages. For instance, you can create a rule to automatically move emails from a specific sender or with certain keywords in the subject line to a designated folder. This automation will help to keep inboxes organized and ensures that important messages are easily accessible.
- Invoice Processing: A simple automated process could also involve generating and sending invoices to customers. By integrating an invoicing system with your company's automated CRM for instance, you can generate invoices automatically based on predefined templates whenever a sale or order is completed. Your automation tool can then send the invoice to the customer via email, reducing manual work and the potential for errors.
Avoid selecting a process that still requires human intervention to ensure a smooth transition. Gradually, automate mission-critical and customer-centric processes after understanding the pros and cons of automation.
To be on the safe side, hire a Business Process Automation Consultant to help you map out the processes to start with.
2. Choose the Right Tool
The success of a Business Process Automation initiative depends heavily on the Business Process Automation software you adopt. Choose a tool that aligns with your organizational needs, including scalability, level of capabilities, and types of users. Ensure it’s easy to use for non-technical business users, without having to always depend on Business Process Management Consultants to fully manage it. Some software focus on application development, while others prioritize transparency and process tracking.
3. Define Automation Goals
Defining automation goals is a crucial step toward successful implementation. Many organizations make the mistake of implementing automation without clear goals in mind, leading to wasted time and money. Some common goals to set include reducing cost, improving customer experience, improving efficiency, and standardizing your goals. Get a Business Process Automation Consultant to create a phased approach so you can minimize investment while still allowing for the flexibility to adjust course if things do not go as planned.
Measuring performance at every step is important to ensure the investment is worth it. Failure to do this could lead to unnecessary expenses that should have been avoided.
4. Establish Clear Roles and Hierarchy with a RASCI Chart
Automation can result in changes to roles and responsibilities, leading to confusion if not handled properly. To prevent issues such as buck-passing, scapegoating, and deflection, create a RASCI chart to establish the roles and responsibilities of every stakeholder involved in the process. Identify the process owner and set up a transparent hierarchy to enforce accountability. Choose a human-centric solution that aligns with the existing strategy and work with team leads to ensure strategic alignment.
5. Involve Everyone in the Process
Introducing automation to an organization can cause resistance from employees, both active and passive. That can lead to the failure of your automation efforts and make it difficult for employees to embrace the change.
To encourage stakeholder involvement in the adoption of a new Business Process Automation software, create a Change Management Plan. It's essential to keep everyone on the same page and involve them from the early stages. Conduct brainstorming sessions to understand pain points and make everyone feel important in the organization. That will make it easier to leverage automation to solve problems.
6. Train the Users
The success of automation depends on how well the new platform is embraced by staff and how well they interact with it. Business Process Automation enforces accountability on process owners, making it essential to coach those at the top of your RASCI chart to become well-versed with your automation tool.
Educate users about the fundamentals of the platform, the rationale behind automation implementation, and the desired outcomes. To ensure user acclimation, choose an intuitive and easy-to-use Business Process Automation software that fosters self-learning. This way, users won't have to undergo numerous learning sessions to understand how the platform works.
7. Plan for Contingencies
While Business Process Automation tools are generally effective, they are not infallible. Technical issues can arise, and it is important to have contingency plans in place to prevent your business processes from grinding to a halt.
For instance, BPA tools often need to communicate with other systems to retrieve or input data, trigger events, or perform tasks, such as sending emails or updating databases. But due to differences in data formats, protocols, or security requirements, the integration between BPA tools and other systems may encounter technical challenges. In other words, the BPA tool may not be able to access the required data from another system or may fail to pass the data in the correct format or order. This can cause errors, delays, or even system crashes.
So, in the event of a technical malfunction, you can utilize a failsafe option to enable the manual handling of operations. Choosing a human-centric approach to BPA can provide added security and reliability.
8. Focus on Continuous Improvement
Automation is not a static process, but rather a process that requires ongoing evaluation and enhancement. Without consistent monitoring of the outcomes of automation, it is impossible to optimize the efficiency of the process. It is the responsibility of the process owner to continuously assess the performance of automation and make adjustments to maximize its potential.
While the data produced by automation may be vague, identifying specific metrics to track through key performance indicators (KPIs) can facilitate the process of analysis and improvement. Also, implementing a "Monitor and Optimize" approach is crucial to the long-term success of your Business Process Automation (BPA) implementation. Failing to do this risks rendering your BPA system ineffective over time.
How to Ensure Data Accuracy Before Measuring BPA Success
To get the actual picture of the impact of your Business Process Automation (BPA) tools or systems, make sure that every change/improvement you have had to make in these tools, as you use them, is reflected in your Business Process Management (BPM) database and set goals. This synchronization helps maintain consistency across your organization and allows for accurate monitoring and analysis of your business processes. Some key aspects you should update in your BPM database when updating your BPA include:
- Process Definitions: Update the BPM database with any changes to process definitions or workflows in your BPA. This includes modifications in the sequence of tasks, addition or removal of tasks, changes in roles and responsibilities, or updates in the process flow.
- Automation Rules: As you update the automation rules in your BPA system, ensure that the corresponding rules and conditions are reflected in your BPM database. This helps maintain consistency in process execution and analysis.
- Data Inputs and Outputs: Any changes in data inputs, outputs, or data formats within your BPA should be updated in the BPM database. This ensures accurate data mapping and seamless integration between your BPA and BPM systems.
- Integration Points: If you have introduced new integration points or modified existing ones in your BPA, update the BPM database accordingly. This will ensure that the connections between your BPA tools and other systems in your organization are accurately represented in your BPM system.
- Performance Metrics and KPIs: Update any changes to performance metrics and Key Performance Indicators (KPIs) used in your BPA in the BPM database. This allows for accurate performance monitoring and analysis of your processes.
- Documentation: Ensure that your BPM database's process documentation is up-to-date with the changes made to your BPA. This includes any changes in process diagrams, user guides, or any other relevant documentation.
Key Metrics and KPIs for Measuring Business Process Automation Success
There are 8 key metrics and KPIs that can help track Business Process Automation success. These are:
- Time Saved
- Error Ratio
- Deviation rate
- Productivity Boost
- Cost Reduction
- Qualitative Indicators
1. Time Saved
In the realm of business, business owners often say there are not enough hours in a day, and this seems true. The concept of saving time refers to the duration of time that can be preserved through the automation of a process when compared to its manual execution. This metric quantifies the amount of time saved every time automation is initiated, and the total time saved by the team for a day, week, or month.
One way to measure the time-saving benefits of Business Process Automation is to calculate the cycle time of a process before and after implementing BPA.
Cycle time is the time it takes to complete a single unit of work in a process, from start to finish.
For example, the cycle time of a loan application process may be the time it takes from receiving the application to approving or rejecting it. Let's assume that the cycle time of the loan application process before implementing Business Process Automation was 10 days. After implementation, BPA is successful if the cycle time decreases to 5 days.
Using this formula - Time Savings = (Cycle Time Before BPA - Cycle Time After BPA) / Cycle Time Before BPA x 100%, the time saved in this instance would be:
- Time-Saving = (10 - 5) / 10 x 100% = 50%
This means that the loan application process now takes 50% less time to complete than it did before implementing BPA.
This time-saving will lead to higher productivity, faster customer service, and improved overall performance.
2. Error Ratio
One of the main perks of automation is its ability to significantly minimize the frequency of errors that occur during a workflow or process. When tasks are completed manually by your team, there is a higher likelihood of errors, particularly when the tasks are tedious and repetitive or carried out for an extended period. That’s a natural consequence of human nature.
However, how do you determine the effectiveness of your automated processes in reducing errors? That’s where the metric of error rate comes in. The error rate is the comparison of the number of mistakes your team made when performing tasks manually to the number of errors that arise when the same tasks get executed through automation.
In addition to measuring error reduction, this metric also determines whether or not you are maximizing the full potential of your processes. Typically, successful automation is more dependable and consistent than a manual process. So, to measure the error rate, compare the number of errors that occur when certain processes are completed manually versus the number of errors that occur when these same processes are automated. The higher the error rate, the more prone your manual processes are to errors - and conversely, the more efficient they become when automated.
3. Deviation Rate
Despite the benefits of automated processes, they are still developed by humans and are therefore not immune to errors. Fortunately, you can use the rate of deviation to determine the level of optimization and effectiveness after implementing Business Process Automation in your organization. The rate of deviation is calculated as the percentage of total steps in a workflow where you need to deviate or make manual adjustments.
To measure the rate of deviation in your workflow, you can review the entire workflow, count the number of steps where manual adjustments are required or where deviations occur, and then divide that number by the total number of steps in the workflow. A lower rate of deviation indicates a more efficient workflow.
4. Productivity Boost
One of the primary benefits of Business Process Automation is its ability to handle manual, repetitive tasks, and free up your team's time to focus on high-value work. By tracking the productivity boost, you can measure the impact of automation on your business.
Productivity boost measures the additional amount of impactful work that your team can now complete because of automation. Although it is a more subjective metric, it is one of the most significant benefits of automation. For example, with the time saved through automation, can your sales team spend more hours engaging in personalized conversations with leads? Can your designers collaborate more and spend less time managing files? Improving the work environment is one of the primary goals of Business Process Automation, and this should reflect in the data you collect. To measure productivity boost, each team that has implemented BPA should monitor how much additional time they can now allocate to critical work and new responsibilities.
5. Cost Reduction
Saving money is a top priority for any business, and automation is a powerful tool for achieving cost reduction. The key is to measure its impact using the appropriate metric, such as cost reduction. Cost reduction measures the amount of money your automated processes have saved your business. Automation can significantly reduce labor costs, as fewer people are needed to run automated processes compared to manual processes. By automating tasks, your employees can devote more time to critical work that drives business growth, increasing revenue in the process.
Automation doesn't just save money; it also generates more money. To measure cost reduction, track the number of hours your team spent manually completing processes and multiply it by their hourly rate. Here’s an example:
Cost = Hours Spent x Hourly Rate
- Cost is the total cost of manually completing the processes
- Hours Spent is the total number of hours spent by the team completing the processes
- Hourly Rate is the hourly rate of the team, which includes the cost of wages, benefits, and overhead expenses.
For instance, if a team of 5 employees spends a total of 50 hours manually completing a process and their hourly rate is $50 per hour, the cost of manually completing the process would be:
Cost = 50 hours x $50 per hour = $2,500
Additionally, calculate the cost of the tools required for manual processes and add it to the overall cost.
This is a metric that measures the amount of output your company generates at a specific time. Implementing Business Process Automation typically increases this KPI by reducing cycle time, which is a sign of successful implementation. Here’s how to calculate Throughput:
Throughput = Number of Units Completed / Time Period
- Throughput is the number of units of work completed per unit of time
- Number of Units Completed is the total number of units of work processed by the system over the time period.
- Time Period is the length of time over which the units of work were processed.
For example, suppose a BPA system processes customer orders and can process 100 orders per hour. If the system has been running for 8 hours, we can calculate the throughput as follows:
- Throughput = 100 orders per hour x 8 hours = 800 orders
This means that the system has processed 800 customer orders over the 8-hour period, resulting in a throughput of 100 orders per hour.
By tracking Throughput over time, you can identify patterns, trends, and variations in your automated processes, which can help you optimize the system's performance and improve overall efficiency. However, note that an increase in Throughput tends to create a bottleneck at times in the workflow if it can't be processed any further.
That's why it's crucial to assess the end-to-end processes of your company thoroughly when planning to digitize via Business Process Automation. This way, you can be prepared to act quickly in case of congestion and avoid potential setbacks.
Business Process Automation (BPA) can significantly reduce compliance issues by improving accuracy and data protection. It can streamline adherence to new regulations, which is especially important given the frequent changes in compliance requirements.
Additionally, BPA can reinforce compliance standards by automating checks and balances. To measure the impact of BPA on compliance, track the number and cost of compliance errors that arise. By doing so, you can identify areas that need improvement and adjust your processes accordingly.
8. Qualitative Indicators
These are key performance indicators (KPIs) for Business Process Automation that you cannot directly measure as they require first defining quantifiable properties. These indicators include factors such as flexibility, scalability, and human-related measures like employee morale or customer satisfaction.
For instance, employee morale is a qualitative measure of employee engagement in the short term. To evaluate it, you can have employees from departments most affected by automation fill out surveys about their workload or role in the organizational chart before and after automation. That can help assess the impact of automation on employee morale and engagement.
Measuring the success of Business Process Automation implementation is crucial for any organization that aims to improve efficiency, reduce costs, and increase accuracy. To determine the success of BPA implementation, using these metrics and KPIs above will not only help your organization understand the impact of BPA on operations but also assist in identifying areas for improvement and optimizing your BPA systems to maximize their benefits.
Want to start measuring the impact of Business Process Automation (BPA) on your business? Schedule a free consultation with us today. Our experts will help you assess the effectiveness of your BPA implementation, identify areas for improvement, optimize your processes for maximum performance, and set up reporting dashboards so you can get a bird’s-eye view of the ROI of your BPA investment!