MT400 Unit 8 Automation Business Case Example

What Software Adds After the Redesign: An MT400 Unit 8 Automation Business Case Tested by Simulation

[Student Name]

Purdue University Global

MT400: Business Process Management

Unit 8 Automation Business Case

[Instructor Name]

[Date]

The company, costs and benefit ranges are composite; results come from the stated simulation script, and the sources cited are real.

Executive Summary

The request is a workflow platform at about 96,000 dollars to implement and 38,400 dollars a year in subscriptions. Over five years at a 9 percent discount rate, the simulation gives a median net present value of about 42,300 dollars, with a 10th percentile close to zero and a 90th percentile near 88,600. The investment pays back in about three years in the median trial, and in about one trial in ten it loses money. The result depends most on re-keying savings: if only 40 percent of the office hours saved turn into real savings, the case fails in nearly every trial.

Choosing the Baseline

The baseline gets its own section because it decides the answer. Measuring the platform against today's process would credit it with gains the redesign already delivers for the price of training: the measure booked at the kitchen table, the dropped signature, the certificate signed at the walkthrough. Hammer (1990) warned against automating a process before redesigning it, and the same logic applies to the business case. The baseline is therefore the redesigned process from Unit 7, as piloted in Lincoln, and every benefit below is an increment over it. To show why this matters, a second simulation runs the same platform against the old process; its median net present value is about 267,000 dollars, a figure that would look persuasive and would be mostly borrowed from the redesign.

Benefits, as Increments and Ranges

Each benefit is entered with a low, likely and high value and its source.

Re-keying hours saved: the platform carries measure data, orders and completion records between departments without retyping. Office staff estimate 2,000 to 3,100 hours a year, likely 2,600, at a loaded cost of 30 dollars an hour. Only part of those hours become real savings, through reduced overtime or not filling a vacancy, so a realization share of 50 to 95 percent, likely 75, is applied. The likely value is about 58,500 dollars a year.

Remakes: the platform's field validation is expected to cut the remake rate by a further 0.3 to 1.0 points beyond the redesign, likely 0.7, on about 6,500 units a year at 360 dollars per remake, about 16,400 dollars a year at the likely value.

Return visits: a further 1 to 3 points, likely 2, on 1,300 jobs at 290 dollars a visit, about 7,500 dollars.

Time to payment: a further 1 to 4 days, likely 3, faster than the redesigned process, on 13 million dollars of annual revenue at a 9 percent cost of capital, about 9,600 dollars a year.

Costs

Implementation is entered as 88,000 to 115,000 dollars, likely 96,000, from two vendor quotes and an internal estimate of staff time. The subscription is 38,400 dollars a year. Tablets for crews are refreshed in year four at 14,000 dollars.

The Simulation

A short Python script in the appendix draws each uncertain input from a triangular distribution defined by its low, likely and high values, applies a first-year adoption ramp of 40 to 60 percent of full benefits, computes five years of cash flows and discounts them at 9 percent. It repeats this 10,000 times. A triangular distribution is a simple, transparent choice when only a range and a most likely value can be estimated, and the script prints every input beside the results so a reader can rerun it.

The software's case rests on office hours turning into money, and the simulation shows how narrow that bridge is.

Results

The histogram of net present values centers near 42,000 dollars, with the 10th percentile at about 700 and the 90th at about 88,600. About 10 percent of trials are negative. Payback falls in year three in the median trial. The spread is wide relative to the median, which is the honest finding: the platform is more likely than not to repay its cost, but the margin is thin and could disappear if the largest assumption proves optimistic.

Which Assumptions Move the Result

A ranked chart shows how strongly each input moves the result. Re-keying savings dominate, with a correlation of about 0.88 with net present value. Remake reduction follows at about 0.34, the working-capital effect at about 0.21, implementation cost at about minus 0.18 and return visits at about 0.15. Rerunning the simulation with realization fixed at 40 percent drops the median net present value to about minus 44,000 dollars, negative in nearly every trial.

What the Platform Would Change in Daily Work

The numbers rest on concrete changes in how people work. Technicians would enter measurements on a tablet with required fields for site conditions, so the notes problem found in Unit 4 could not recur. Order entry would receive orders already structured, checked against the manufacturer's catalog for impossible sizes. Schedulers would see kit status update as units are received. Crew leads would capture the completion certificate in the same app. Accounting would invoice from the certificate without retyping. Dumas et al. (2018) describe process-aware information systems in these terms: their value comes from enforcing the process's own rules at each step, which is why the platform is configured to the redesigned process rather than the other way round.

What Would Change the Answer

Three developments would strengthen the case: a vendor price below 30,000 dollars a year, evidence from the pilot that order entry hours are already falling, or a decision to open a fourth showroom, which would spread the fixed cost. Two would weaken it: a manufacturer portal that already handles ordering, or a realization share that cannot be supported by named savings.

Recommendation

Approve the platform on one condition: before signing, the office manager names which hours will be saved and how, such as overtime eliminated or a vacant order-entry position left unfilled. If no more than 40 percent of the estimated hours can be named, do not proceed. Davenport (1993) argued that information technology creates value when it enables a redesigned process, not when it is laid over an old one, and the condition ensures the savings are real rather than assumed.

Limits

The ranges are estimates from staff and vendors, not measured results, and triangular distributions understate the chance of extreme outcomes. Some benefits resist pricing, such as better information for managers, and are left out, which makes the case conservative.

References

Davenport, T. H. (1993). Process innovation: Reengineering work through information technology. Harvard Business School Press.

Dumas, M., La Rosa, M., Mendling, J., & Reijers, H. A. (2018). Fundamentals of business process management (2nd ed.). Springer. https://doi.org/10.1007/978-3-662-56509-4

Hammer, M. (1990). Reengineering work: Don't automate, obliterate. Harvard Business Review, 68(4), 104-112.