Custom Software Pays Big Dividends

If you could get 80% interest in a bank
would you make such an investment?

Assuming simple interest, you invest $3,000 and you would get $2,400 per year in interest. After 5 years, you have your original $3,000 plus an additional $12,000 in interest for a total of $15,000. Most people would consider this a good investment.

Let's analyze a hypothetical custom software application....

That's an approximate savings of:

• $20 per day
• $100 per week
• $5,000 per year
• $25,000 over five years
• This $4000 would need to earn 105% interest in a bank for the same return!

Where To Focus
When isolating a task to automate, focus on the most likely pay-off. Often, tasks that are performed daily (e.g. hand-writing a daily deposit slip, entering deposits into an accounting system) are likely candidates. The savings don't have to be terrific to make it worth while, either. Even productivity savings of half an hour per day can add up quickly. You don't eliminate a chunk of work by automating it. However, it may happen more efficiently if automated. For example, a two-hour-per-day manual task may be reduced to one-and-a-half hours per day, if automated.

Value vs. Cost
Putting a value on the time of your employees is not easy. If you reduce the time it takes them to do their work from 40 hours per week down to 36 hours, it is unlikely that you would cut their salary by 10% and send them home every Friday at 1 p.m. to recover this savings. Rather, the prudent employer would find some other meaningful task.

Potentially, the productivity savings could translate into a delayed or eliminated need to hire another person, in which case the savings do translate into hard dollars. However, it doesn't have to do so in order to make automation worth while.

If you save 4 hours of employee time per week, then it is an oversimplification and overly conservative to calculate the savings based on what the employee costs you, per hour. You are actually gaining more yet, assuming the employee is worth more to you than you pay. This is good news; the bad news is that it is hard to quantify. 

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