You are to assume the role of the financial analyst for Red Shield Insurance Company. The vice president of finance has hired you to perform an analysis and determine the payback period for a potential investment.
The vice president has been meeting with the controller and other accounting personnel to discuss the performance of repetitive tasks. Examples include setting up a vendor in accounts payable and preparing an explanation of benefits to send out to members. The vice president would like to improve these processes by incorporating Robotic Process Automation (RPA). RPA takes everyday repetitive transactions and develops bots that perform those transactions. The accounting personnel will need to manage the bots to make sure the process does not get stuck. Bots can perform the transactions 24/7. On average it costs $4,000 per year to run the bot.
After some initial analysis, Red Shield has found that to develop one process to enter vendors in accounts payable using RPA is estimated to cost $7,000. It is estimated that that the accounts payable clerk spends 5 hours per week entering vendors in the accounting system. The accounts payable clerk earns $45,000 a year which includes the taxes and benefits. The accounts payable clerk works 2,000 hours per year. The vice president of finance wants you to determine the payback period for this investment. You are to:
- Calculate the annual cost savings of using RPA
- Calculate the Payback Period (Initial Investment in RPA/Annual Cost Savings from RPA)
- Discuss the results and make a recommendation.
- Discuss how this technology might impact employees.
