How this is calculated
Hours a week, times the people doing it, times their hourly cost, times the working weeks in your year. Time spent fixing mistakes is added, because it is part of the true cost and it is usually invisible in job descriptions.
The result is what the process costs you annually in staff time at today's rates.
Getting the hourly cost right
Use fully loaded cost, not salary. Salary divided by hours understates what an hour actually costs you once you include employer contributions, equipment, workspace and management time. A common rule of thumb is somewhere between 1.25 and 1.4 times base salary, but use your own figure if you have one.
If you are unsure, running the calculation twice — once at salary rate and once at 1.3 times — gives you the range, and the range is usually enough to make the decision.
Why the correction time matters
Most estimates of a manual process count the time to do it and ignore the time to fix it. Re-keying data between systems produces errors at a rate that surprises people, and each one costs more to find and correct than it did to create.
That correction work is also the part automation removes most reliably. A system that moves a record between two places does not mistype it on a Friday afternoon.
What this number is not
It is not your saving. Automating a process rarely removes 100% of the time it takes — there are exceptions to handle, approvals to give, and the system itself needs occasional attention. A realistic expectation for a well-chosen process is that most of the routine time goes and some supervision remains.
It is also not the whole benefit. The measurable second-order effects are usually consistency, speed and visibility: the work happens at the same pace regardless of who is in the office, and because a system that runs a process also records it, you can finally measure it.
How to read the result
Compare the annual figure against what building the system would cost. If the process costs several times a build in a single year, the case is straightforward. If it is close, the deciding factor is usually not money — it is whether the process is stable enough to be worth encoding, which is a question about your business rather than about software.
Questions
- Does automation remove all of this cost?
- No, and any vendor saying it does is overselling. A well-chosen process usually loses most of its routine time while keeping some supervision and exception handling. Treat the figure as the size of the prize, not the cheque.
- What hourly cost should I use?
- Fully loaded cost rather than salary — salary alone understates what an hour costs once contributions, equipment and management time are included. Many businesses use roughly 1.25 to 1.4 times base salary.
- Is my data stored?
- No. Everything is calculated in your browser. Nothing is sent to a server and nothing is recorded.
- What if several people spend different amounts of time on it?
- Use the average per person and the headcount. If one person carries most of it, run the calculation for that person alone first — the figure is often large enough on its own to answer the question.
Now you have the number, the useful question is what to do about it. That is one call.
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