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Work out how much inefficient processes are costing you

When it comes to the day to day running of most modern businesses, there are some accepted operating expenses, such as paper and travel, that are considered vital business expenses. These must be completed as part of a daily workflow, but are there more cost-effective ways of working? Our team have done the maths and, using our cost-inefficiency calculator, you can figure out how much you can save for yourself with Apple software and mobile devices like iPad and iPhone…

 

Conal Siddall

With the advent of modern mobile devices and the functionality they offer businesses, there are now lots of opportunities to replace outdated processes with digital alternatives that are cheaper in the long run. Inefficient processes cost your business both time and money. Whether you’re using paper to document customer information, barcode scanners to check in guests or travelling for a meeting, you’ll be spending money on both the physical costs of the processes and the productivity costs of an employee committing their time to complete the task.

When it comes to making daily workflows more efficient, time is money. If half an hour of an employees day were spent manually filling out, collating and filing documents, they could lose up to 130 hours of work in a year to that single process. So, not only are you wasting money on the whole manufacturing, purchasing, printing and storage of physical documents, but your staff could lose over three weeks of work just to maintain it.

 

Cost-inefficiency calculator

You can use this cost-inefficiency calculator to estimate the cost of your current business practices. This takes into account two things, the cost of the inefficient process, and the cost of time wasted completing the process.

 

Cost of inefficiency x frequency = inefficiency cost

Cost of lost opportunity x frequency = lost opportunity cost

Inefficiency cost + lost opportunity cost = total loss

 

In this formula, inefficiency cost is the cost of your inefficient process, and lost opportunity cost is the value of the hours your employees could be spending on other jobs. Frequency is any value that gives us the per year cost. (Some reasonable assumptions have to be made around how much time a task may take, as this can vary depending on the business.) By combining these figures, you can analyse your inefficiencies and identify the opportunities where mobility can make a difference.

 

Common cost-inefficiencies

Here are some of the most common cost-inefficiencies you can save on. We’re going to use our 50 employee business as an example.

 

Paper

Examples: Data collection, collateral, reference material, training resources, internal documents.

Costs: Printing, ink, manufacturing, recycling, collating and filing.

According to Legalex, the average UK office worker in a small to medium enterprise uses 6000 sheets of A4 paper per year. Including the costs for using and maintaining printers, cabinets and office space, they calculate the average per year cost at £14,616 for a business employing 50 staff members.

The average office worker earns £21,315 according to reed, which is just over £10 an hour. Making the assumption that an office worker may spend half an hour, at least, during the day completing administrative tasks with paper (130 hours per year), we can calculate the cost at around £1300 per employee. For a business with 50 employees, that’s £65,000 – this is the lost opportunity cost.

This means the total cost would be £65,000 + £14,616 = £79,616 per year being wasted on inefficient paper practices alone.

Resolutions: Digitising documentation and using iPad and iPhone to complete forms and access files.

 

Go to location

Examples: Meetings, visiting project sites, professional development, visiting customers or suppliers.

Costs: Mileage, parking, toll fees, flights, hotels, taxis, car hire, food allowance, hospitality.

Luggage News report that the average cost of business travel is £750 per employee per year, including those who don’t actually travel themselves. So, for our 50 employee business, this would equal £37,500.

Time spent travelling is hard to pin down, as, depending on the mode of travel, employees can sometimes complete work while on the move. A study by Pace Productivity found out that sales reps spend around 6.6 hours per week travelling, or 310 hours per year. If our business had 15 salespeople on £10 an hour before commission, this would be around 4650 hours spent travelling, at a cost of £46,500 per year.

This means the total cost of travel could be £37,500 + £56,500 = £84,000 per year.

Resolutions: Using desktop and mobile devices with cameras to attend video conferences, use collaboration software and conduct eLearning.

 

Static data

Examples: PDF email attachments, paper customer records, locally stored data on a Mac.

Costs: Wasted time manually transferring data, typical costs from data storage solutions for physical and digital copies.

Static data is information stored and collected in a way in which it would have to be manually transferred elsewhere. For example, records of stock taken on paper that would have to be typed into a computer database later on. For our example business, we’ll assume that they spend no extra money on processes solely dedicated to static data, as paper costs are covered above and programs like email and office suites are essential.

The main cost here is time. It is reasonable to assume that an employee may spend at least half an hour working with static data while collaborating on a project and sharing it via email, entering data into a program, or transferring data from one computer location to another. This would mean they spend 130 hours a year on these tasks, which would cost £65,000 for 50 employees.

This means the total cost could be £65,000 a year, solely in productivity, for static data.

Resolutions: Using software that allows data to be automatically transferred from one location to another, such as collaboration software like Adobe Acrobat, Airdrop on Apple devices, and using a shared server.

 

Information silos and restricted access

Examples: Difficult to access information, password protected files, files locked in cupboards, admin rights, no flow of data between systems, processes working independently.

Costs: Time wasted accessing, editing and transferring data between systems, money spent on incompatible systems, IT staff with skills to manage the issues and handle the software.

Renting a server alone could cost around £200 per month, or £2400 a year. CRM systems can cost around £60 per user per month. However, not all users would have access to this, so let’s assume our business have 25 licences costing £18,000 a year. Together, these make £20,400.

According to a McKinsey report, employees spend 9.3 hours per week, on average, searching and gathering information. For our example business with 50 employees, that’s over 437 hours per year wasted trying to find information, or £43,700.

For the total cost, we can just look at the productivity cost, £43,700, as you could be paying more money for a better infrastructure, and still cut costs through better efficiency.

Resolutions: Computers, servers and infrastructure that integrate well with one another, devices that allow data sharing between them, greater staff understanding of internal devices and processes.

 

Adding it all up

In total, improving just these four processes could save you a whopping £272,316 per year!

 

Why Apple is the perfect fit

When looking at the best technology for making processes digital, Apple is perfect for reducing costs and improving efficiency. With Apple devices, you can replace many of your single use devices, completely digitise paper processes, conduct video conferences from anywhere you have access to the internet, improve collaboration across teams and much more.

Their devices are also great for the user too, they have intuitive and easy to use interfaces and best in class integrated hardware and software. Apple provides enterprise-grade security and privacy for the devices, apps and data, so IT can rest assured that they’re safe from malicious attacks or malpractice. Finally, Apple Business Manager provides a single platform for managing devices and deploying apps across your business.

If you’re currently using processes that you think could be more cost-effective, it’s a good idea to research the viability of digital alternatives and identify the opportunities for change. By using our cost-inefficiency calculator to estimate your savings, and thinking about the wider benefits you may gain from using the latest mobile devices, the case for digital transformation is strong.

 

Want to know more about cutting costs on inefficient business practices? Get in touch with the team on 03332 409 255 or email business@Jigsaw24.com. For the latest news, follow us on LinkedIn, Facebook and Twitter.

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