Workflow Automation ROI: How to Calculate Your Savings

Before investing in automation, you need to know the payoff. Here's how to calculate the real ROI of workflow automation.

The ROI Formula

ROI = (Annual Savings - Annual Cost) / Investment × 100

Let's break down each component.

Calculating Annual Savings

1. Time Savings

For each automated process:

• Current time per task: ___ minutes
• Tasks per day: ___
• Days per year: ___
• Number of employees doing this: ___
• Hourly labor cost (including benefits): $___

Formula: (Time × Tasks × Days × Employees × Hourly Rate) / 60

2. Error Reduction

For error-prone processes:

• Current error rate: ___%
• Cost per error (rework, customer impact, etc.): $___
• Number of transactions per year: ___
• Expected error rate after automation: ___%

Formula: (Current Rate - New Rate) × Transactions × Cost Per Error

3. Capacity Gains

Revenue enabled by faster processing:

• Additional transactions you can handle: ___
• Revenue per transaction: $___
• Margin: ___%

Formula: Additional Transactions × Revenue × Margin

Example Calculation

Scenario: Automating invoice processing

Time Savings:

• Current: 15 min per invoice
• After automation: 2 min (review only)
• Invoices per day: 50
• Working days: 250
• Hourly cost: $35

Savings: (13 min × 50 × 250 × $35) / 60 = $94,792/year

Error Reduction:

• Current error rate: 4%
• After automation: 0.5%
• Cost per error: $150
• Annual invoices: 12,500

Savings: 3.5% × 12,500 × $150 = $65,625/year

Total Annual Savings: $160,417

Investment:

• Development: $45,000
• Annual maintenance: $5,000

ROI Calculation:

Year 1 ROI: ($160,417 - $5,000 - $45,000) / $45,000 = 245%

Payback period: 3.4 months

Processes Worth Automating

• High volume (done many times per day)
• Rule-based (clear logic, few exceptions)
• Error-prone (human mistakes are common)
• Time-sensitive (delays have consequences)
• Data-intensive (lots of copy/paste)