Before going forward with an automation project, here are 10 steps to see if the technology up for consideration is right for your operation.

Your company has put together a team to test the waters, create a budget, and investigate what’s been done by other companies in your situation. Now you’re ready to see if you can justify automation for your company.

Comparing the alternatives to determine the right solution is a 10-step process, according to Mike Kotecki, senior vice president of HK Systems.    

Step 1. Identify your real task. Remember: Your job is not to justify the project but to make the best use of the company’s money. You have to be willing to walk away to protect the company.

Step 2. Define your planning horizon. For automation, Kotecki suggests using a 10-year plan. “Beyond 10 years, the data is too fuzzy and less than 10 years is not enough,” says Kotecki. 

Step 3. Define your objectives. Automation projects come in four flavors: Have-to-do projects are those that have to be done to keep a customer or rectify an unsafe working condition. Projects you can’t afford not to do are projects that will clearly pay for themselves through reduced costs or improved revenues. Projects you should do have softer justifications, like providing better customer service. Projects you could do are those that might create a better image but aren’t necessary. The challenge is this: Do nothing and over time the projects you could do become projects you have to do.

Step 4. Compare the ABC&Ds. Every project has at least four alternatives: the cost of the automation project; the cost of doing nothing; the cost of upgrading the current situation; and the cost of creating a hybrid solution.

Step 5. Identify the total cost of doing the project, including the initial investment, the long-term cost of ownership, the cost of covering the gap between present operations and completion of the project. Will the solution allow you to increase revenues or realize soft paybacks like improved customer service? If so, that reduces the total cost.

Step 6. Specify an interest rate to account for the effect of inflation on the project.

Step 7. Now compare the alternatives. One approach is to choose a controlled scenario, and compare each of the other alternatives to that control.

Step 8. Perform a sensitivity analysis. Simply put: Perform what-if scenarios around changes in interest rates; changes in frequency and volume from a downturn or upturn in business; and unplanned events like a competitive buy out. These will give real tangible options.

Step 9. Select the best alternative based on your original objective, the previous steps, and any other alternative uses for that investment.

Step 10. Implement the system and measure the new process to establish credibility for the next project.