How to easily estimate return on investment for your process improvement project

Donna Tellam, 4 minutes read

Whether it’s for obtaining budget allocation, prioritization of projects, or executive approval, there are many reasons why it is important to have a high-level estimate of the potential return on investment (ROI) of your process improvement project. Most clients I work with tell me they have no idea what their existing processes cost the company and that as a result, they struggle to calculate ROI.  Most find it too daunting and become paralyzed by the idea of it all. 

While it seems daunting to discover your process metrics, it's actually quite simple. It only requires a few hours of your time, and the ability to listen, observe, and record times using the stopwatch on your phone. If your current process is already built on the Pega platform, detailed process timing metrics are available to you if you know where to look…but we’ll get to that later. This article will provide some simple steps to get the answers you need in less than a day. 

Familiarize yourself with the current ('as is') process

The easiest way to get a good understanding of every step in a process is to look at a process map. Some companies already have these for all of their business processes, but if they don’t exist for your process, you can easily create one for yourself. Create a swim lane process map to familiarize yourself with all of the personas that take part in the process and the steps they perform.   

Other important information to gather before you start includes: 

  • Process name 
  • Process owner 
  • Number of items processed per day 
  • Number of workdays per year 
  • List of process personas (all who take part) 
  • Average loaded hourly rate for all process personas 
    • This represents every possible cost associated with an employee divided by the number of hours they work. 
  • Added costs such as printing, couriers, and postage 
  • Ongoing costs such as software license fees, maintenance fees, and document storage 

Shadow three sets of user personas as they do their actual work

Find three groups of processors to 'shadow' through the process. The best practice is to include a top, bottom, and average performer. I have found that observing more than three subjects results in diminishing returns. If you are unable to get three sets of users, then try to observe one or two average users. After all, some data is better than none! 

Observe and time each discreet step using the stopwatch on your mobile phone and log the times in minutes and seconds. Be sure to take notice of any cheat sheets the user may be referencing in the workspace, number of pages they are printing (if any), and any other information that may be relevant and take note of it. 

Estimate processing time for the improved process

To figure out how much time your new process will save, you must think through your new process design, including mocking up or prototyping the screens for the new solution. These can be rough sketches, high-fidelity mock-ups, or even a working prototype.  

Create a mockup or prototype 

Mocking up your new process can be as simple as hand-drawn sketches that clearly show each screen and all buttons and fields, or they can be high-fidelity realistic looking screen designs created in Illustrator, Photoshop or any screen design software. Additionally, you can take the extra step of creating a working prototype with buttons that take the user through the series of screens.  Of course, this is the most accurate way to estimate the time it takes to walk through your improved process. 

Create a script for your run-through 

Write a script describing the tasks you want the end users to simulate in your mockup/prototype. Make sure you clearly explain the task they need to complete. 

Ask users to complete the task following your script

Just like you did when observing the current process, you should select three groups of users to run through your mockup/prototype. If you have a prototype, you can simply ask users to walk through the process on screen. Ask your users to follow the script, simulating what they would do in the screens and describing their thought process. 

For hand-drawn sketches and screen mockups, spread printed screens on the table in order and ask users to point to each field, button, or menu item, talking through what they are thinking and doing.  

The first time your subjects walk through the screens, take note of places where users become confused or stumble, and adjust if necessary. This step also serves the purpose of helping you find any design flaws in your new process. However, unlike a usability test, your goal is to determine if any time savings will be gained from our new process. Ideally you would test your mockup/prototype for usability ahead of time. Once you've made any necessary refinements, ask your users to walk through the mockups/prototype several times so they become familiar with it.  

Observe and time each step  

Using the stopwatch on your mobile phone, observe and log the times in minutes and seconds that it takes the users to complete each step. Make note of any added costs that will be a part of the new process, including printing, postage, or any other costs. 

Calculate the savings

For the current (as-is) process, calculate the average processing time for each persona type and multiply it by their average loaded rate.  Add to that any per-item costs, and you now have a general idea of the cost of processing one item. Take that number, multiply it times the average number of work items you process per day, then multiply that number times the number of working days in a year. You now have a rough estimate of the current yearly cost of your process to the business. Do the same calculations for the improved (to-be) process and subtract that number from your as-is process cost, and you have the yearly savings for your process. 

To make this all easier, Pega has created an ROI Estimator tool in Excel to help you with your calculations. You can find that tool here.

Understanding the ROI for each process improvement project will make your organization more efficient and help you prioritize your project roadmap. 

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Want to get your process discovery and ROI even faster? Let our enterprise advisory services team conduct a Vision to Value Workshop for you and engage a digital transformation specialist to guide you until you are ready to run on your own. Contact us today to find out how.

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About the Author

As a Digital Transformation Partner, Donna Tellam helps clients find innovative ways to leverage Pega products for business transformation using Design thinking techniques.  She has over 25 years’ experience in enterprise software with expertise in product management, user experience, and business process optimization.