“You can’t improve what you don’t measure”.
— Peter F. Drucker
Drucker never advocated obsessing over measurements because it can narrow the focus of leaders, reduce workforce motivation, and create a culture where unethical behaviours are commonplace. In short, the tyranny of metrics can seriously undermine your business.
Nonetheless, a lot of things in your organisation can and should be measured. Automation is one example. The best way to measure automation and assess the success of your efforts is to implement a few key automation KPIs.
Let’s explore the reasons you should implement automation KPIs and some best practices to help you make the most of them.
Why your business needs Automation KPIs
A Key Performance Indicator or KPI is a measure of progress over a specific time period for a particular objective. KPIs are quantifiable measures that show progress toward a planned result. KPIs are valuable for every area of a business, from finance and accounting, to marketing, sales, and yes, automation.
The right automation KPIs provide tangible targets to aim for and clear milestones to gauge the progress of your automation efforts. A robust set of insightful automation KPIs don’t just measure. They measure what matters. They generate valuable insights that enable leaders – particularly those who are automation champions – to build a solid business case for adopting or scaling automation. With impactful automation KPIs, leadership can also:
- Secure cross-functional support from business units and other executive leaders
- Get funding signoff for new automation investments
- Take appropriate decisions for maximum impact on strategic business outcomes
Automation KPIs also help middle managers and the rank-and-file to discover and explore new opportunities for automation. When strategically selected and carefully measured, automation KPIs also:
- Drive a culture of automation
- Enable the organisation to evaluate new candidates for automation
- Keep teams aligned on automation objectives and goals
Additionally, automation KPIs tied to strategic goals also create greater accountability within the organisation. Employees and managers can track the progress of automation initiatives, clearly see what’s not working, and make any necessary adjustments to achieve intended goals.
Measuring success with Automation KPIs
Most organisations adopt automation for one of three reasons:
- To save time
- To cut costs
- To improve process outcomes in terms of quality, error rate, or consistency
Regardless of your specific goal, you may achieve success in one of these areas or even in all three. But how do you measure this success? How do you compare it with goals and determine if you met them or if there’s still some way to go? Here’s where automation KPIs come in.
Automation KPIs are also important because different stakeholders have different expectations from automation and you need a way to capture these expectations and compare them to reality. We talk about this next.
Measuring success from different perspectives
You need automation KPIs to clarify and understand what automation success really means for your business. This fact is important because automation success often means different things to different stakeholders. How can these stakeholders assess whether the automation effort was successful from their point of view? Enter – automation KPIs!
For example, take website scraping with Robotic Process Automation (RPA). A pricing team may use RPA to extract data from various ecommerce websites. The software will help them to save time, streamline operations, and get high-quality data with fewer errors. But for C-suite leaders, saving time or reducing errors may not be the primary intention. Their goal is to replace manual labour with automation to reduce costs and repurpose skilled workers to more strategic, higher-value activities.
Both parties want to measure the success of the automation effort. However, they both define “success” differently because they have different automation objectives. That’s why they require automation KPIs. Moreover, the KPIs each party chooses will be different from the KPIs selected by the other.
What kind of Automation KPIs do you need?
The answer: it depends.
The automation KPIs you select would depend on the process and its key stakeholders.
Consider Accounts Payable (AP) automation. AP automation enables touchless invoicing, streamlines supplier management, and simplifies global payments. It also increases visibility into billing activities and helps strengthen financial and anti-fraud controls.
But as with website scraping, different people need different things from the AP automation software. For the AP team leader, the main driver of automation could be to save time on keying invoices. But for the head of the department or the CFO, the primary motivation could be to save money or accelerate financial close.
How do these different parties gauge whether automation was successful at helping them meet their goals?
All these parties must be clear on what they want to measure (i.e., how they define success) and accordingly identify the relevant KPIs for success measurement and assessment. Depending on their objectives, they may identify different sets of “hard” or “soft” KPIs such as:
- Total manhours saved over X period of time
- Total cost savings over X period of time
- Customer satisfaction
- Incidents processed by automation
- Successful vs failed automation executions
Figure out what you are trying to measure and then select the automation KPIs you need.
How to identify and set up Automation KPIs
By now, you understand that automation KPIs could vary by department/stakeholder and depend on their specific goal(s). That’s why your first step should be to identify the goals and set appropriate targets to meet these goals.
Also establish a baseline by capturing where you are today before automation. Knowing the baseline will help you assess progress and determine whether you are meeting your automation goals.
Next, identify the person who will manage each KPI, address any roadblocks that may prevent the organisation from achieving its intended goal, and report on progress. You should also set the timelines to reach targets depending on the process and its key stakeholders.
Also make sure that all stakeholders clearly understand the what and the why of each KPI. For instance, what does “total manhours saved by automation” mean for the company? What about “total cost savings”? Unpack these details and communicate them to whoever needs them the most. This is important to motivate the team and ensure that everyone remains aligned on the direction and goals of automation.
Automation KPIs best practices
Keep in mind these good practices to select the best automation KPIs and boost automation ROI:
- Prioritize automation candidates based on business criticality or expected impact
- Track all automation KPIs consistently
- Create automation building blocks to simplify future automation efforts
- Clearly communicate all automation- and KPI-related information to relevant stakeholders
It’s also important to choose the right automation candidates. A good way to do this is to leverage a data-driven approach using hard metrics, such as how much time is required if the process is completed manually and how much time automation has saved for similar processes. You can also hone your process scoping skills by deconstructing existing processes and reviewing how many building blocks already exist.
Finally, guard against these three common mistakes:
- Jumping into automation without creating a baseline
- Automating a process just because it seems like an easy candidate
- Not identifying automation KPIs to measure success
Any of these mistakes will make it harder to justify the next automation candidate and reduce the probability of successful automation.
In this article, we explored why automation KPIs are vital for organisations adopting automation. Quantifiable KPIs can help you to:
- Measure automation success
- Identify and quickly address gaps
- Provide tangible targets to keep teams focused
- Drive a culture of automation
To achieve all these benefits, make sure to identify the right KPIs. Set up a baseline, establish accountability, and clearly communicate automation goals. Finally, select the right automation candidate and track all automation KPIs consistently.
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