This month (October 7-9), PIA/GATF will hold its annual Workflow Conference in Atlanta, Georgia.  As the name implies, this conference will focus on how graphic communications companies can use optimized workflows to increase operational efficiency, productivity, and profit.  The theme of this year's conference is "Everyday Workflow Challenges," and the three-day event will feature four keynote/general sessions and eight breakout presentations organized around two tracks--management and technical.  During the conference, I'll be discussing some of the economic implications of workflow automation in a session titled, "Is There an ROI on Workflow?"  Given recent developments in the graphic communications industry, this topic is both highly relevant and very timely.

One of the hottest buzzwords in the graphic communications industry today is workflow automation.  It's become almost impossible to pick up a trade periodical or visit an industry website like WhatTheyThink without coming across an article, press release, or other item that deals with automating workflows.  And workflow automation technologies will be prominently featured at this month's Graph Expo.  This attention reflects the importance of more efficient workflows to the future of the graphic communications industry.

Many managers of graphic communications companies, as well as a host of respected industry economists and observers, agree that graphic communications firms must increase their productivity if print is to remain competitive with emerging, less costly methods of communication.  Improving productivity is also critical to increasing the profits of industry firms.  The real issue now facing managers of graphic communications companies is not whether to invest in more automated workflows, but which investments to make.  With business conditions in the graphic communications industry still challenging, managers must be able to measure the real economic value of more automated workflows before they make substantial investments in workflow automation technologies.

Calculating an estimated return on investment for a prospective workflow automation project is not a "black art," nor does it require an understanding of advanced calculus.  ROI is simply a comparison of economic benefits to costs, and the formulas required to make the comparison are relatively straightforward.  During the Workflow Conference, I'll describe several ways of expressing ROI, and I'll explain the mathematics needed for each approach.

In fact, the most difficult task involved in developing an accurate ROI estimate for a prospective workflow automation project is not performing the required mathematical computations.  The real challenge lies in estimating the value that a more automated workflow will produce.  To estimate this value accurately, we must first define what we mean by the term "workflow," and then we must understand how automating a workflow creates value.

"Workflow" is simply another term for a business process.  Companies automate business processes in order to increase efficiency and improve productivity.  But how do "increased efficiency" and "improved productivity" translate into better economic performance, i.e. how do they create value?  All business processes are composed of two or more related work activities.  Companies acquire resources (people, equipment, facilities, etc.) in order to be able to perform work activities, and the performance of work activities consumes these resources and generates costs.

Process (workflow) automation creates value for a company if it reduces the costs of the work activities the company performs.  This cost reduction can be produced in two distinct ways.  First, automation can lower the cost of a process by reducing the amount of time required to perform the work activities that comprise the process.  Reducing the amount of time required to perform a process also creates potential value for a company by enabling it to produce more work without increasing its costs.  And second, automation can reduce process costs by enabling some process work activities to be performed using lower cost resources.

Estimating software is a classic example of an automation technology that reduces process costs in both ways.  It reduces the time required to prepare an estimate by automatically performing most of the mathematical operations needed to calculate the estimated job costs.  In addition, the use of estimate templates can both speed up the estimate preparation process and enable certain estimates to be prepared by less experienced and less costly employees.

These basic value creation concepts are used to calculate the ROI of a workflow automation project in a five-step process.


Describe (map) the workflow in its current or "as-is" state
Estimate the cost of performing the workflow in its as-is state
Describe (map) the workflow as it will exist after automation (the "to-be" workflow)
Estimate the cost of performing the to-be workflow
Identify all of the benefits (value) and costs associated with the workflow automation project and use these benefits and costs to calculate the ROI


Calculating the ROI of prospective workflow automation projects enables managers to prioritize their automation investments based on which projects offer the highest economic pay-off to their company.  In addition, establishing the cost of existing workflows reveals which workflows are the most expensive, and this helps managers focus their search for automation opportunities.

Determining ROI as described in this column is a critical step in evaluating prospective workflow automation investments, but it doesn't provide a complete picture.  The need for additional analysis is due partly to the nature of the ROI calculation and partly to the nature of workflow improvement itself. 

The ROI calculation methodology described above is based on changes in the cost of the economic resources consumed by the workflow being evaluated.  However, overall company spending and, more importantly, company profits are determined by the cost of the resources supplied by the company to perform the workflow.  When a workflow is automated or otherwise improved, the volume and/or the cost of the resources used to perform the workflow decreases.  But this decrease in resource usage doesn't automatically lower the costs of the resources supplied to perform the workflow.  Managers must also determine whether the reduction in resource usage created by workflow automation can be translated into a reduction in resources supplied that will produce cost savings and increased profits at the company level.

At this month's PIA/GATF Workflow Conference, I'll describe the ROI calculation process in greater detail.  I'll also explain why the distinction between the cost of resources consumed and the cost of resources supplied is critical to evaluating prospective workflow automation projects.  Hope to see many of you in Atlanta.

For more information about the PIA/GATF Workflow Conference, visit www.gain.net.