Lesson 2 of 5, 13 min with the exercise

Work out the cost per task

Turn a vague benefit into one number.

Cost per task includes the person's time as well as the software. Review time often gets left out, and it's frequently the biggest cost of the new process.

Cost per task =
  (minutes of staff time ÷ 60 × hourly cost)
  + tool cost per task

Invented example:
Before: 12 min × $30/hour           = $6.00
After:  3 min review × $30/hour     = $1.50
        + $0.10 in tool costs       = $1.60
Saving per task                     = $4.40

Multiply by your monthly volume, then subtract what it costs to build and maintain. A big saving per task can still lose money at low volume. Time saved only counts if that time gets used for something else, so say what it'll go towards.

See it in practice

Now add the build. Continuing the invented example: at 500 tasks a month, $4.40 saved per task is $2,200 a month. If the build cost $8,000 and upkeep costs $400 a month, it pays back in about 4.4 months ($8,000 ÷ $1,800). At 50 tasks a month, the saving is $220, less than the upkeep, so it never pays back.

Common mistake: Counting hours saved as money saved. If nobody's workload or costs change, you have capacity rather than cash, so say which it is.