Digitalization – Return on investment

by | 22. 02. 2021 | Laboratory digitalization

Reading Time: 7 minutes

Often it is very difficult to show the value of digitalization projects. It is important that we calculate return on investment or ROI, where we include all the benefits and costs that apply to the specific project. 

If you are new to ROI, here is a simple equation to explain it.

There are different ways to go about calculations and interpretation of ROI, which you can read about in this article. Most importantly, you need to include all the benefits and costs that apply to your organization. Typically, ROI for digitalization comes fast after implementation because the laboratory and production processes have high operation costs.

As a result, digitalization projects can be successful even when only marginal improvements are made to the laboratory processes.

In this article, we discuss short-term and long-term savings of digitalization as well as use-cases that might help you get started.

How do companies digitally transform and succeed 

The digital transition will be a serious test of the vision that you have for your company and how much you are truly dedicated to the goal of digital transformation. It will require you to think long-term and keep your eyes on the prize that is coming with going digital. PwC states that most successful companies required a holistic and purposeful approach, to design the structure that allowed them to get better digital transformation ROI.

“The only way companies can successfully manage the process and

reach their strategic goals is by measuring their digital ROI every step of the way.” PwC

PwC’s research studied 2380 executives worldwide to determine the factors that make companies successful in digital transformation. They identified these companies based on consistent revenue and added value that they got from their digital investments. And that was only the top 5% of companies in the study.

Here are some key things that the top 5% of digital transformation companies have in common:

  • 96% of these companies have a long-term vision of their transformation process.
  • They make a consistent and long-term investment plan for digital transformation.
  • These companies invest 33% more than others into digital transformation.
  • They do not prioritize only saving time but also changes that suit their people and drive business.
  • They have 17% higher profit margin growth.

Identifying bottlenecks

For digital transformation to be as smooth as possible, you need to identify the bottlenecks and opportunities for improvement in your processes. In order to do this, you need to thoroughly evaluate the current work and map your processes and data flows. Then you turn the bottlenecks into digitalization projects that can be the main focus areas for you during the digital transformation, meaning that they will also significantly contribute to the ROI.

Some bottlenecks that you might discover within your laboratory:

1. Data management

In many laboratories, data is still being managed manually and, in most cases, on paper. This type of work directly affects the laboratory staff’s productivity and efficiency on a daily basis. Moreover, manual data management done on paper instead of in an electronic data management system is more error-prone and prevents long-term traceability, accessibility, and reusability of data. By implementing data management systems, such as ELN or LIMS, laboratory staff can focus on essential tasks rather than routine work that can be minimized with software and/or automation system.

2. Reporting

While reports are very important part of the workflow, especially in the scientific community, they are also very time-consuming for people preparing them. With the implementation of suitable digitalization tools, you will save time on these tasks and assign the time spent in writing reports to more meaningful work. Many ELN and LIMS systems have automated reporting features built-in, meaning that you need a few seconds to prepare it, rather than a few hours. There are other interesting tools that help with even more complex content writing automation, such as SciNote Manuscript writer.

3. Time-consuming experimental processes

Laboratory workflows often consist of experiments that take a lot of time to execute. These are typically tasks that require long incubation times (immunoassays) or complex pipetting plans (qPCR). You can fully automate the process with pipetting robots and connected software, or you can decide to partially digitalize the process by using software only for the part of the process that is the most critical, for example, automated data analysis or pipetting.

4. Laboratory equipment booking

In laboratories that have not adopted digitalization yet, there is a practice of signing up to a physical calendar to book a certain laboratory device. That calendar is usually placed beside the device, which means that anyone who wants to secure their work time needs to be physically present in the laboratory. Besides that, for any further arrangements amongst coworkers for potential adaptation of booking, everyone needs to be available to discuss that at the same time and place.

From bottleneck identification to savings

To get a better idea of the benefits that digital transformation brings, we prepared a list of short-term and long-term savings.

Short-term savings

Short-term savings can be recognized within a very short period; that could be days, weeks, and months. These savings will improve the ROI, but the best part is that the positive results are noticeable almost right away. It is crucial to compare time spent doing specific tasks before and after digitalization to evaluate your ROI accurately. While most of the savings will probably not arise instantly, but rather in the longer run, it is very encouraging when you see instant improvements.

Example: Scheduling of laboratory equipment

When using smart tools for laboratory equipment scheduling, your energy consumption and, consequentially, your electric bill will decrease significantly. Studies state that this reduction can be up to 70% for the largest energy-consuming equipment. But even smaller energy consumers will experience a decrease in electricity consumption by more than 50%.

This happens due to the energy consumption you might not think of – powering up and down the instruments. Thermocyclers will use a few kilowatts of power to perform such an operation, and from these, you will be able to see the savings on your electricity bill in a short time.

Not to mention that laboratory staff will save an enormous amount of time as booking will become very transparent and straightforward—no need to write your name in a notebook or an obsolete spreadsheet.

Long-term savings

This process should be carried out across the enterprise in six key strategic focus areas: customers, employees, operations, safety and soundness, infrastructure, and disruption and innovation. Metrics for measuring digital ROI, both quantitatively and qualitatively, need to be developed and linked clearly to the company’s overall strategy and goals.

Example Time savings in assay data management

Digitalization in the laboratory will improve productivity and efficiency, while at the same time, you will also optimize your processes. You will free up the time that your employees now use to manage data from their assays manually. With that time, they will be able to work on other important assignments, such as the R&D pipeline, which will shorten the time from lab to market.

Short- and long-term saving examples

Based on our company’s experiences and PwC digital ROI framework, we prepared a list of possible savings with digitalization (Table 1). These are examples that will enable good ROI for your laboratory when you will be going through digital transformation. There are some objectives that you might not yet be thinking about.

Table 1: Short- and long-term saving examples

Laboratory ROI calculation

In many cases, the best way to understand something is by looking at examples. While savings are very individual and different for every laboratory and laboratory process, we made an example calculation for the digitalization of qPCR.

The case is based on a comparison of the digitalized and conventional options of a common process for a lot of qPCR laboratories. We analyzed the difference between manually preparing pipetting plan and pipetting, and carrying out the same processes with Pipetting Aid PlatR (Table 2). PlatR is an easy-to-use tablet application for reliable pipetting, and it is a great tool to implement within the laboratory digitalization process. Since PlatR is our product, we can provide the most accurate calculations of ROI for it.

Factors that contribute to the ROI mostly in this case are:

  • Reduction of the error rate for manual pipetting
  • The reduced preparation time of pipetting plan

Calculations are based on the following assumptions:

  • Task is to prepare a pipetting plan and pipette 1 plate for 1 user
  • Loaded cost of researcher per hour is 80$
  • An average error rate of 1%, when pipetting 96- or 384-well plate
Table 2: Savings when using digitalization tool PlatR for preparing a pipetting plan and pipetting 96- or 384-well plates

These calculations do a great job of presenting the savings you will make when using just one simple tool on your digital transformation journey. The table also points out the money that you are losing now due to errors in pipetting.

To make an extra step, we calculated how many months are needed to return on investment for PlatR. As seen in the Figure 1 below, if you only have one researcher, your investment will pay itself off in less than 8 months for 96-well plates and in less than 6 months if they are pipetting 386-well plates.  Those are calculations for only one user. If your laboratory has more than one researcher, you will be able to experience a snowball effect, which will enable you to get your ROI even faster, so keep that in mind.

Figure 1: ROI for 96-well plate, when using PlatR for 1 user that is pipetting 1 plate per week

Conclusion

  • Typically, ROI for digitalization is fast, even for marginal improvements.
  • It is crucial to carry out digital transformation with a vision as well as a good and thorough plan.
  • Bottleneck processes are a good starting point for digitalization because you will get ROI in a shorter time.
  • ROI for PlatR can be less than 6 months.
  • The calculations that we presented are just an example of a high ROI that you will be able to achieve if you choose digitalization. Now imagine what amount of savings a complete digital transformation would bring you.