ROI on process automation

I wrote this corny rant on 2-25-2005 but never posted. Upon re-reading, I think it's worth posting.

An A/P Clerk, and AppConnector user, called me up this week and happily proclaimed: "yesterday, I did four days' worth of work in one day".

Wow...that's a 400% productivity improvement by using AppConnector simply to automate a multiple data entry process into the single-point data entry process. I did some simple (read: naive) calculations and...say, for an organization staffing 10 accounting clerks working on a $10/hr salary just keying and searching for invoices, in a month's time, the costs incurred would be as follows:

  • no AppConnector: 10 x 8 x 10 x 5 x 4=$16000
  • with AppConnector = 16000/4 = $4000, a saving of $12000.

This means that in the short order of a few months, AppConnector would have paid for itself. Pretty good ROI, isn't it?

I said that's a naive calculation because, amongst other things, this productivity gain usually has side benefits such as less data re-keying errors, which, in the first instance, would have incurred more costs of correcting the problem after-the-fact. This benefit results in data consistency across disparate systems. Mind you, that's not to say that AppConnector will totally eliminate data entry errors altogether, because if the error was made in the originating system, it would be replicated in the second system as well when the data is brought over. But then this would be an entirely different problem, not one of re-keying errors.

Back in high school, I did an Economics research paper on process automation and fifth generation computers--the kind of computer systems referred as "expert systems" at the time. This was a time where there were rumbling apprehensions in the labour force about how these great evil things called "computers" would eventually take over the world and put people out of a job because everything would be automated by computers/robots. Anyway, my thesis for the paper was that computers were built to help mankind not to replace it. Any "unskilled" job that they might end up replacing would be an opportunity for people to learn new skills and adapt. This is good for humanity because we don't want to be stuck with the same inefficiency all the time--whether we realize that it is an inefficiency or not--but we should strive to better ourselves each and every day. And isn't that what evolution is all about?

But this was high school, and nearly 20 years ago when I was young(er) and (more) stupid, so what did I know!

Definition: A change that is good is one that benefit you, your organization or, more generally, humanity, in the long run.

When change is good, resistance is futile. Be one with the force (of change, that is)!


Process Automation Technologies said...

good post about the benefits of efficiency in the workplace and how it relates to ROI