3 Key Factors that Maximize ROI in Business Process Automation Initiatives

“How quickly will I make my money back?” That’s probably the first thought that comes to mind when implementing new systems and processes. CFOs generally prefer to capitalize expenses whenever it’s feasible, and other executives are eager to realize the business impact of their initiatives. Return on investment is the name of the game.

Business leaders in the electronic components industry increasingly pursue data and automation solutions to streamline business processes. This strategic move involves a calculus that includes several factors related to the business, the market, and people.

Whether you’re a distributor, component manufacturer, or OEM & EMS, the question remains, “How much will this cost me, and how long will it take to make my money back?” At Orbweaver, we understand the different factors businesses need to manage to accelerate return on investment, positioning us as a reliable partner for your business.

Factors that Impact Return on Investment

Business leaders can gauge the expected Return on Investment in automation projects by considering three main elements: market, business, and human factors. Each factor uniquely impacts ROI, and their influence varies in magnitude.

Each engagement has a different mix of these contributing factors, underscoring the importance of understanding them for a comprehensive ROI assessment.

Human Factors

Some of the human factors driving ROI are tangible and tactical. Two human components are the headcount and compensation of the teams looking to take advantage of process automation. Other human factors are grouped into what can broadly be described as productivity gains. Automation improves productivity in the following ways:

• Elimination of manual tasks
• Reduction of errors
• Throughput and speed improvements
• Shortening of the learning curve

The primary goal of automation projects is not headcount reduction. It is meant to empower skilled and knowledgeable employees to increase productivity and add more value with their time and resources. Automating repetitive yet necessary tasks enables teams to concentrate on more complex business issues and customer requirements, thus increasing their value and contribution to the business. 

Business Factors

Both internal and external business processes can benefit significantly from automation. Many common bottlenecks in business processes develop when attempting to get data from one system to another. There are often transformations that must occur when shuttling data from one place to another.

As organizations expand, the tech stacks that support vital business processes grow larger, compounding several disruptive issues. Creating efficient data flows between commonly used business systems, such as PIM, CMS, CRM, and ERP, is a significant challenge without a middleware designed to handle the nuances of the business. Data must be analyzed, validated, and transmitted at every transformation point. 

These might sound like technical factors, and they are, but these bottlenecks prevent scale. As sales activity increases, technical constraints can erode margin gains or hinder revenue growth, leading to a higher ROI for business process automation initiatives. Improving operational efficiency is essential to achieving margin expansion and revenue growth targets.

Market Factors

The most significant factors affecting the ROI of automation initiatives are those driven by market forces. Fundamentally, the industry’s digital transformation will require more speed than ever. Component sellers already see their customers demanding increased process automation from suppliers. The competitive landscape will see automation-ready suppliers in an advantageous position because they can respond more quickly to external forces.

A time of plentiful inventory and component availability can give a false sense of security that there is no need for business process automation projects. Still, business leaders who use this time to invest in their business tech stack will be poised to take advantage of the next cycle. In times of allocation, responding to demand in microseconds can make all the difference.

An Example Use Case

Quoting is an everyday activity that is ripe for automation. Many organizations have large teams of quoters who field requests and coordinate with business units to complete the quote. This process has many moving parts, people, and different data types located in various, often disconnected and siloed systems. Business deals usually start with a quote. If this front-end part of the process breaks or is slow, it creates a bad customer experience. 

Consider a hypothetical quote team of 10 people. The average annual salary of the quote team is $75k. The quotes this team completes generate $10M in revenue at an average margin of 15%. Improvements to the quoting process involve streamlining the intake of an RFQ.

For example, connecting a quoting platform to downstream systems via API to drastically speed up the ability for a quoter to access the data they need to complete the quote. 

Quotes now get back to customers much faster. An efficiency gain of just 10% in the process means that this same group of people is now delivering a potential $1M increase in revenue with a $480k margin increase. The efficiency gains amount to a $112k process improvement. In many cases, this is more than enough to justify the investment in an automation project and maximize process automation ROI.

Another common bottleneck in the process is effectively getting part data into the channel. Whether it’s a distributor who has to manage a flood of part data from the many suppliers in their line card or a component manufacturer who has to get their part data into the hands of the many distributors out there. Either side of this equation has a data scale problem.

Often, increasing throughput means increasing headcount. Supplier and channel managers can more effectively get data from point A to point B with a part data syndication or part data intake platform like Orbweaver’s DataHub, which already knows the nuance and intricacies of how each supplier likes their data. The teams on either side can then focus on more complex relationships while DataHub handles the legwork, and all they need to do is respond to alerts and monitor status. 

Explore the various scenarios using our own comprehensive ROI Calculator and see the potential benefits for your own business today.