Executive Summary
This framework provides a structured approach to calculating ROI for decision automation projects. Use it to build a business case for pilots and measure post-implementation value.
Part 1: Understanding the ROI Components
1.1 Cost Categories
Current State Costs (Before Automation)
- Direct labor: Hours spent on decision tasks × hourly rate
- Error costs: Rework, corrections, customer credits
- Opportunity cost: Delayed decisions, lost deals
- Overhead: Management time, escalations
Future State Costs (After Automation)
- Remaining labor: Human review, exceptions
- Technology: Pilot fees, maintenance, hosting
- Training: Initial training, ongoing updates
1.2 Benefit Categories
Hard Savings (Measurable)
- Labor hour reduction
- Error rate decrease
- Throughput increase
Soft Savings (Estimated)
- Faster customer response
- Employee satisfaction
- Scalability without hiring
Part 2: The ROI Formulas
2.1 Basic ROI Formula
ROI = (Annual Net Savings − Investment) ÷ Investment × 100
2.2 Annual Net Savings Formula
Annual Net Savings = Current Annual Cost − Future Annual Cost
2.3 Payback Period Formula
Payback Period (months) = Investment ÷ Monthly Savings
Part 3: Calculation Worksheets
3.1 Current State Cost Worksheet
| Cost Item | Formula | Your Numbers |
|---|---|---|
| Labor Hours/Month | (Volume × Time per item) | _____ |
| Labor Cost/Month | Hours × Hourly Rate | _____ SAR |
| Error Rate | Errors ÷ Total volume | _____% |
| Error Cost/Month | Errors × Cost per error | _____ SAR |
| Total Current Cost/Month | Labor + Error + Overhead | _____ SAR |
3.2 Future State Cost Worksheet
| Cost Item | Formula | Your Numbers |
|---|---|---|
| Remaining Labor Hours | (Volume × Reduced time) | _____ |
| Remaining Labor Cost | Hours × Rate | _____ SAR |
| Technology Cost/Month | Pilot + Maintenance | _____ SAR |
| Total Future Cost/Month | Labor + Tech | _____ SAR |
3.3 ROI Calculation
| Metric | Formula | Result |
|---|---|---|
| Monthly Savings | Current − Future | _____ SAR |
| Annual Savings | Monthly × 12 | _____ SAR |
| Investment | Pilot + Setup | _____ SAR |
| 12-Month ROI | (Annual − Investment) ÷ Investment × 100 | _____% |
Part 4: Saudi Market Benchmarks
4.1 Typical Pilot Ranges
| Use Case | Time Reduction | Error Reduction | Typical ROI (12mo) |
|---|---|---|---|
| RFQ-to-Quote | 40–60% | 30–50% | 200–350% |
| Customer Service | 25–40% | 20–40% | 150–250% |
| Knowledge Q&A | 50–70% | 40–60% | 250–400% |
| Lead Routing | 30–50% | 25–45% | 180–300% |
4.2 Cost Benchmarks (Saudi SME)
| Role | Hourly Rate (SAR) | Monthly Hours |
|---|---|---|
| Sales Coordinator | 50–80 | 160–180 |
| Customer Service Rep | 40–60 | 160–180 |
| Operations Staff | 45–70 | 160–180 |
Part 5: Example Calculation
Scenario: RFQ Automation for a Distributor
Current State
- Volume: 200 RFQs/month
- Time per RFQ: 30 minutes
- Hourly rate: 60 SAR
- Labor cost: 200 × 0.5 × 60 = 6,000 SAR/month
- Error rate: 8%
- Error cost: 16 errors × 500 SAR = 8,000 SAR/month
- Total Current: 14,000 SAR/month
Future State (with Automation)
- Time per RFQ: 10 minutes (review only)
- Labor cost: 200 × 0.17 × 60 = 2,040 SAR/month
- Error rate: 2%
- Error cost: 4 errors × 500 SAR = 2,000 SAR/month
- Technology: 3,000 SAR/month
- Total Future: 7,040 SAR/month
ROI Calculation
- Monthly Savings: 14,000 − 7,040 = 6,960 SAR
- Annual Savings: 6,960 × 12 = 83,520 SAR
- Investment (Pilot): 50,000 SAR
- 12-Month ROI: (83,520 − 50,000) ÷ 50,000 × 100 = 67%
- Payback Period: 50,000 ÷ 6,960 = 7.2 months
Part 6: Building Your Business Case
6.1 Key Slides
- Problem Statement: Current costs and pain points
- Proposed Solution: Pilot scope and approach
- ROI Projection: Using this framework
- Risk Mitigation: Read-only first, Security Gate, rollback
- Timeline: 6–8 week pilot with Acceptance Pack
6.2 Stakeholder Mapping
| Stakeholder | Primary Concern | Data to Show |
|---|---|---|
| CFO | Cost justification | ROI, payback period |
| COO | Operational impact | Time savings, throughput |
| IT | Security, integration | PDPL posture, API approach |
| End Users | Ease of use | Training plan, support |
All benchmarks are indicative. Actual results depend on data quality, process complexity, and pilot execution. LeenAI pilots include measurement frameworks to track actual ROI.