Automation ROI seems mysterious. Vendors promise vague benefits. Finance wants concrete numbers. Here is how to bridge the gap with real calculations.
Start with time saved. Map the current process step by step. Time each step. Multiply by frequency. If a task takes 15 minutes and happens 40 times weekly, that is 10 hours saved weekly.
Business Insight
Calculate your true cost by including time spent, error correction, and opportunity cost - not just direct expenses.
Convert time to dollars. Use fully-loaded labor cost, not just salary. Include benefits, overhead, and management time. $30/hour salary often means $45/hour true cost.
Factor in error reduction. Calculate current error rate and error cost. If 2% of orders have errors costing $50 each to fix, 1,000 monthly orders means $1,000 monthly in error costs.
Add speed value. Faster processes often mean faster cash collection, quicker customer response, and competitive advantage. These values are harder to quantify but real.
Calculate automation cost honestly. Include software costs, implementation time, training, and ongoing maintenance. Most vendors underestimate ongoing costs.
"Every hour spent on repetitive tasks is an hour not spent on strategy, relationships, or innovation.
Build the payback calculation. Total benefits minus total costs, divided by monthly benefit. A $10,000 implementation saving $2,000 monthly pays back in 5 months.
Consider risk and optionality. Automation creates capacity for future growth. This strategic value is hard to quantify but matters for long-term planning.
Old Way
- •Spreadsheet chaos
- •Tribal knowledge
- •Reactive firefighting
- •Growth limited by capacity
New Way
- •Connected systems
- •Documented processes
- •Proactive monitoring
- •Scalable operations
Real example: Invoice automation. 100 invoices monthly, 20 minutes each, $40/hour = $1,333 monthly labor. 5% error rate, $30 per error = $150 monthly error cost. Total current cost: $1,483. Automation cost: $5,000 + $100/month. Payback: 4 months. Annual savings: $15,000.
The framework applies to any automation. Plug in your numbers. Make decisions based on data, not hope.
