With technology today almost anything can be automated. Yet so many organization are unwilling to invest capital to automate mundane tasks in order to save their employee’s time – updating multiple contact lists with the same information, generating website content after entering the same information in their database, etc. Why? For many organizations they view employee salaries as a sunk cost, something they were going to spend money on regardless, where as investing $7,500 in technology development is a very clear cost cutting into the bottom line. The problem with this thinking is it doesn’t take into account the opportunity cost – what could that employee have done with that time otherwise?
Granted, some executives might say, “Sure, I know there’s an opportunity cost, but I have an entry level employee completing the task. They only cost the company $40,000 a year, this task only takes 2 hours a week of their time, and we’re going to upgrade to the system in three years, at which point any development would be lost anyways. I’ve done some calculations and that works out to 2 hrs out of a 40 hr work week = 5% of their time. 5% of $40,000 is $2,000, over three years gives me a total of $6,000. That’s less than the $7,500 of development.”
Sure, that all sound great, but let’s take a closer look at these numbers. First, there’s the salary. Every good accountant knows that a $40,000 employee doesn’t cost $40,000. Add in benefits such as healthcare, commuter costs, payroll taxes, retirement, supplies and even the cost of coffee, and that employee’s true costs rise about 20-25%. So now that employee is costing $40,000 x 120% = $48,000. Still, that only gets us to $48,000 x 5% x 3 years = $7,200. Still coming out ahead, right?
But we’re not done! Is two hours a week really 5% of someones time? No. Year has 365 days. About 104 are weekends, so 261 days. Holidays? Let’s say 10, so we’re at 251. Add in 15 vacation days and 5 sick days and you’re down to 231 days. Times 8 hour days and you’re at 1,848 hours. That means the employee costs $48,000/1,848 hr ≈ $26 hr. 52 weeks a year x 2 hrs a week x $26 hr x 3 years = $8,112.
This calculation doesn’t take into account a range of other items like time spent on training someone on the task, or if the person completing the task leaves and someone new has to be brought in? Likely having to complete a mundane task over and over doesn’t do much for moral. When a task is left to manual entry, there is always the risk of error that may cause additional issues. Plus, when a process requires staff action there will inevitably be a delay, meaning your website or other system will be out-of-date. There is likely some cost to your members or clients in presenting out-of-date information. While calculating the exact cost of all these items is difficult, it doesn’t mean the value isn’t there.
So the next time you realize you’ve got a process that could be automated but isn’t, make sure you’re not wasting money on a bad investment. If you’ve got a specific question about integrating your systems, feel free to shoot us an email at , and we’d be happy to share our thoughts with you.