1. As of 2020, 72% of companies surveyed by Deloitte had already implemented RPA tools. Improved compliance and quality topped the list of benefits reported by RPA pioneers. At the same time, 59% of enterprises registered a significant RPA-related cost reduction, with the median payback period for RPA projects spanning less than 12 months.
2. However, only 3% of companies succeed in scaling their digital workforce, while up to 50% of initial RPA projects fail. Given that robotic process automation costs for a single software bot may range from $5,000 to $15,000, your business might end up spending millions of dollars to achieve company-wide automation.
3. Before making the investment, most production and operations managers will need to provide sufficient evidence to company leadership and stakeholders that automated machinery would be a profitable venture throughout the lifecycle of the equipment.
4. What are the key factors behind the presumably high robotic process automation cost? Most importantly, what should your company do to realize RPA’s full potential without breaking the bank?
MAIN FACTORS TO CONSIDER
1. Cost of Machines - One of the most common questions asked when considering whether to invest in robotic automation is, “what is the equipment’s upfront cost?”. Leadership wants to know the cold, hard cost of an automated machine. While it is only one pillar of the investment equation, it is usually the primary budgeting factor because it requires the most financial resources upfront.
2. Although the total cost can depend upon how many robots you need and what you’re using them for, the average cost for new equipment can range widely from $28,000 for a standalone robotic arm to hundreds of thousands of dollars and up for a complete industrial automation system.
3, While that’s only an approximation, it’s an important consideration when considering robotic automation. Fortunately, there are alternatives to help offset the initial cost, including purchasing used equipment, taking advantage of promotional discounts for multiple robots, and utilizing tax breaks.
4. Cost of Design and Build - Because the upfront cost is only one component of purchasing robotic automation equipment, it’s also critical to examine the cost of the designing and building aspects of the purchase. Note that the lead time to design and build a machine can take time, ranging anywhere from 20 to 55 weeks on average, depending upon the robot’s size and complexity.
5. Cost of Maintenance - Maintenance and auxiliary costs are the other pillars of the robotic automation equation. Maintenance is a cost all leadership and executives need to consider.
6. When robots are appropriately maintained, repaired, and serviced, their production life can be extended by many years before needing to be replaced. You may consider using a preventative maintenance checklist or keeping your equipment on a regular maintenance schedule to advert any more significant issues that could shut equipment down or cut into your profits.
7. Return on Investment - There is no doubt that the leap into robotic automation needs to be worthwhile. The most important question asked is usually, “when can I see a return on investment?”. While some decision-makers may want to see an ROI within two years, it’s imperative to consider all the ways your automation equipment will work for you over the long haul.
8. Let’s say you purchase a medium-sized robot for material handling applications. Taking into account the energy and power needs, you can approximate the cost to operate per hour. When you compare that cost to human labor, especially over the equipment’s lifetime, the differences are often staggering, and the math tends to speak for itself.
9. Most business leaders would agree that they would much rather invest in something that can operate for 75 cents an hour uninterrupted for the equipment’s lifetime than pay for a human laborer for dozens (if not a hundred) times that amount. Humans require breaks, vacation, and are prone to error and injury, too.
10. In addition to the labor savings, let’s take into account the production gains. For example, this custom automated glass bottle loading cell can pick and place bottles into boxes at a rate of 300 parts per minute – no small feat for a human laborer. Not only can this equipment do the job faster, but it can also do it without material waste.
FACTORS DRIVING RPA COST
1. What are the key factors behind the presumably high robotic process automation cost? Most importantly, what should your company do to realize RPA’s full potential without breaking the bank?
- RPA vendor pricing
- The number and complexity of bots that constitute your RPA deployment
- Initial process analysis, RPA consulting, and engineering costs
- The cost of third-party robotic process automation integrations
- Maintenance, support, and RPA scaling costs
2. In most cases, an RPA vendor pricing model and software deployment mode (cloud-based or on-premises) will determine the cost of an RPA license. For example, cloud-based RPA tools might cost less if bundled, while an on-prem deployment can be cheaper if you choose a long-term commitment. Typically, vendor licensing fees account for 30% of total robotic process automation costs instead of an average salary you’d pay to a full-time employee performing tasks manually.
3. Number and complexity of RPA bots - Robotic process automation tools are not created equal. For example, we mentioned attended and unattended RPA bots in the previous section. The core difference between the two types of intelligent software agents lies in their ability (or lack thereof!) to perform tasks independently.
4. It is also necessary to distinguish between business process automation (BPA) and robotic process automation tools; the former merely follow the if-then pattern to automate workflows, while the latter watch your employees interact with software system interfaces and replicate their actions. BPA and RPA have a brighter, more technologically advanced cousin called intelligent process automation (IPA). IPA systems feature imachine learning algorithms that retrieve and analyze unstructured data hidden in enterprise IT systems.
5. The number of bots comprising an RPA system, their cognitive abilities, and the workload they handle are listed among the critical robotic process automation cost drivers. For instance, a simple RPA bot that converts PDF documents into CSV files may cost your company as little as $25 per month Š ” Šas long as it processes a few dozens of records over the course of 30 days and does nothing but that. In this case, extra RPA costs may only include a few hours’ worth of maintenance and verification work.
6. On the contrary, RPA tools that operate within several applications and information systems while checking workflows against multiple conditions require laborious configuration and take longer to implement. Since the initial cost of robotic process automation might be a heavy burden for small and medium-sized businesses, and ROI perspectives might be too vague to justify the investment, a company should carefully review and analyze processes it is looking to automate. Typically, operations that are performed frequently and take less than 30 minutes to carry out make the best candidates for bot-driven automation.
CALCULATING THE ROI
1. To do so, you can use a simple ROI calculation formula, which takes the labor savings subtracted from the automated system’s total cost. For this calculation, you will want to gather the following data:
2. Total system cost: This is calculated by determining the robot’s cost, which is about a third of the total system cost and multiplying that by three. Once you have that number, multiply it by the number of robots you expect to need for the total system cost. You may also want to consider multiplying by four or five to account for additional one-time costs associated with installation, such as backup power units, mounting hardware, connectors, cables, or other auxiliary equipment needed to operate these systems.
3. Robot utilization: Determine how many shifts per day each robot will operate.
4. Current labor costs without a robotics system: Calculate the annual labor costs by estimating the number of operators whose tasks will be replaced by the robot. This total will determine the labor savings of purchasing the automated system.
5. Anticipated labor costs with a robotics system: Decide how many operators you will need to operate, service, and maintain the system and then calculate 25 percent of that labor cost. Subtract that by your current labor costs.
6. Let’s break this down in a real-world example. Say you want to purchase one $50,000 robot that will be in service three shifts per day at one operator per shift:
- Total system cost: $150,000 ($50,000 robot cost x 3)
- Current labor costs without robotics system = $300,000 (1 operators per shift x 3 shifts = 3 operators x $100,000/operator)
- Anticipated labor costs with robotics system: $75,000 (Current labor cost of $300,000 x 25%)
- Labor savings: $225,000 (Current labor costs of $300,000 less the $75,000 anticipated labor for the robotic system)
- ROI: $75,000 in the first year ($225,000 – $150,000)
7. At that rate of $75,000 ROI per year, you can expect to drive returns two years after purchasing the system. Although you will still want to consider the variable costs, such as maintenance, licensing, management, materials, and supplies, this doesn’t consider the significant savings that you can anticipate will be gained from reduced recalls, improved employee morale and safety, and increased product quality and consistency.
8. Even as you scale and automate more processes, the savings will continue to overtake the initial costs. With a comprehensive understanding of the anticipated ROI of robotic automation, you should be able to justify the investment to company stakeholders effectively.
Source:
https://datafloq.com/read/robotic-process-automation-cost-deciphered/
https://sdcautomation.com/how-much-does-robotic-automation-cost/
https://sdcautomation.com/calculating-the-estimated-roi-of-your-automation-project/
