How to Value an Investment in Automation
Automation doesn’t just accelerate your business, it can extract knowledge from your employee(s) and create business rules that your company owns. If you ask yourself, “How much money are you spending on an employee doing “Task X” today?” You can probably find the answer to that pretty quickly- but there are often intangible costs that are difficult to gauge their value.Transcription
So when thinking about how to value automating a task. There’s the basic of how much money are you spending on a person during a task today that could be automated. We’ve had occurrences, for example, a training company that needs prints verification cards and the process of exporting the names and doing the mail merge into Word and then printing the documents and troubleshooting would take four to five hours a week and then you look at that and say, okay, we’re going to four to five hours a week over two years, that’s X amount of hours at cost of 60 bucks an hour, that’s the value of this automation, right? So you look at a payback time frame and the cost you’d be saving at a time and that gives you the equation. So if we can make a software automation for less than that, that’s net positive and that’s great.
Often, there are intangible or hard to measure benefits so for example, there’s a group actually who have the same training company, their process was so complicated, they were unable to hire people into their company to manage a process successfully. The people that had built this this training process, they knew it inside out, they’ve done it for ten years and then they needed to scale. They try to hire a third person this happened three or four times and within three weeks of person quits because it’s just so complicated. There’s so much for them to keep in their heads into to come to speed on that they can’t succeed. And so the company is unable to grow because they have a complicated process that’s hard to learn. So the value there was much higher than just the cost savings per hour. There was weekend, two or three or four extra business if we could just make this an easier process to manage.
What if your process is managed by one person who knows how to do it all the time? What happens if that person can’t show up to work anymore? Your company’s at risk. So partly automation isn’t just accelerating or reducing a work mode, it’s extracting the knowledge of maybe a knowledge worker and baking in some business rules that the company owns.