There is a calculation, and it turns out to be negative more often than automation salespeople admit.
Automation pays for itself when the time saved times your hourly rate times the number of weeks per year exceeds the construction costs within approximately two years. For daily recurring work, this is usually within a few months. For actions that occur a few times a year, almost never.
STEP BY STEP
Calculate it yourself
- Measure how much time it takes nowDon't estimate, just keep track for a week. People systematically underestimate repetitive work, because it is spread out in small chunks throughout the day.
- Multiply by your actual hourly rateUse the rate of the person doing the work, including employer charges. For an administrative employee this is a different number than for yourself.
- Multiply by 46 working weeksThat is your annual cost for this one process. At two hours per week and a rate of fifty euros, you end up with around 4,600 euros per year.
- Contrast this with the construction costsA connection starts around €950, an application from €2,950. Divide the construction costs by the annual savings and you have the payback period in years.
- Count the mistakesManual retyping produces errors, and errors cost repair work and sometimes customers. That is more difficult to calculate, but it is rarely zero.
- Subtract the running costsHosting, maintenance and in the case of AI, model consumption. Calculate the net savings, not the gross.
PITFALLS
When you shouldn't do it
At low frequencies nothing pays for itself, no matter how irritating the action. Irritation is a bad unit of account.
Even if the process is still changing, waiting is wiser. Automating something that will work differently in six months' time means paying twice.
- Low frequency — a few times a year doesn't earn anything back.
- Process is still changing — wait until the method is established.
- System is being replaced — don't link to something that disappears.
- Payback period above two years — usually a sign not to do it.
- Well: daily work — there is almost always profit there.
- Do: work with the risk of error — the hidden costs.
FREQUENTLY ASKED QUESTIONS
More about payback period
What is an acceptable payback period?
For most SMEs, within a year is good and up to two years is defensible. Above that, the assumptions are usually too uncertain to base an investment on.
Do you ever advise against automation?
Regularly. If the calculation does not work out, we will say so in the first conversation. A project that should not have existed results in a dissatisfied customer and that costs us more than the turnover generates.
Does time saved that no one notices also count?
Only if that time goes somewhere else. Saving two hours that goes towards something else without value is not a saving but a shift. Be honest about this in your calculation.
CONTINUE READING
Of course, continue reading about this subject.
It pays off your situation?
Tell us which work will return and how often. We do the calculation and also say if it is negative.