How much time can automation shave off your business's operating costs?

Automation is the hottest trend to dominate the corporate world, and while it may appear hard at first, once deployed, it works silently in the background, significantly enhancing productivity by saving you hours each week.
Roman Jarmukhametov
Roman Jarmukhametov
Senior Web Designer
How much time can automation shave off your business's operating costs?

Businesses over the world are recognizing that automation can help them save money, remove tedious jobs, and free up people to focus on higher-value activities. However, managing the complexity of automation may be challenging for both large and small enterprises.

It's sometimes difficult to determine what can be automated, how much it will cost, and what specific benefits would accrue to your firm.

We'll show you how investing in automation may save your organization time and money in this paper.

What operations can I automate in my business?

According to a survey by McKinsey & Company, roughly 50% of all labor tasks can be automated with existing technologies.

To determine which jobs may be automated, break down your business's procedures into components. These components can then be divided into discrete tasks. Each of these jobs has the potential to be automated.

To determine the first work to automate, company owners must weigh the expense and difficulty of automating the operation against the possible boost in productivity.

According to IBM's Institute for Business Value, tasks may be classified into three categories:

  • Basic: These are repeated jobs that adhere to simple guidelines. They obtain the data they want from structured data sources. Creating bills, making bank transactions, and sending notice emails are just a few examples.
  • Advanced: These activities are repeated on a regular basis and demand a variety of behaviors, but their consequences are preset. For instance, developing a customized quote for a customer based on their specifications.
  • Intelligent: These jobs are unpredictable and do not adhere to basic principles. They demand sophisticated reasoning to complete the task.

Many jobs classified as 'Basic' or 'Advanced' may be automated wholly or partially using technologies like Zapier, saving substantial time and money.

The following are some examples of automatable 'Basic' and 'Advanced' processes:

  • Accounting: Expense management, payroll processing, basic accounting, and revenue reporting.
  • Business growth:  generating quality leads, following up on leads, managing the sales funnel, onboarding new clients, and contract management.
  • eCommerce: Automated upsell or replenishment emails, abandoned cart reminders, pursuing unsuccessful billing charges and pursuing unpaid debts
  • Customer service: triage support tickets, automatically respond to frequently asked questions, remind clients of upcoming appointments, track customer happiness, and solicit recommendations.
  • Marketing: social media management, budget alerts for advertisements, and dynamic content creation
  • Management of the office: booking and scheduling of resources
  • Logistics: Inventory control, reordering, and dispatching
  • Human resources: administration of job applications, employee leave requests, and onboarding of new employees

What if I choose not to automate?

Businesses that have been not so fast or lazy to adopt new technology have suffered throughout history. Recent examples include Kodak, which was late to the digital media revolution, and Nokia, which was late to the smartphone revolution.

Businesses avoid adopting new technology for a variety of reasons, including fear, technical pessimism, and adoption costs.

Simply said, if you do not automate, your rivals will. While the advantages may appear minor at first, as the printing press example demonstrates, they compound rapidly with time.

Thus, how much money can automation truly save you?

To find out how much money you can save by automating, consider the following four factors:

Costs of Labor

Automation helps you save money on wages by replacing, reusing, or increasing your existing employees.

With certain forms of automation, staff may be eliminated totally, since the work is handled wholly by the automation. These employees may then be transferred to higher-value tasks, resulting in growth in non-automated aspects of your firm, such as sales, relationship management, or customer support.

To determine the amount of labor that could be saved:

  1. Calculate the current total labor costs associated with the position, including pay, benefits, and taxes.
  2. Calculate the position's hidden expenses, which include perks, office space, utility use, training, sick leave, and holiday compensation, as well as legal compliance.
  3. Subtract these numbers from the total number of hours worked and divide by the total number of hours worked.

For instance, one of your team members may be responsible for inputting invoices into your accounting system at an hourly rate of £8, a task that takes ten hours per month and costs £960 per year.

Then, add up the fixed expenses of operating your offices and divide by the number of employees.

Calculate an hourly cost by dividing this by the amount of hours done each month. Our hypothetical office costs £140 per year to operate based on the ten hours of monthly invoice input. z

Thus, our total labor cost for invoice entry is £1100 per year. If you can get automation at a price lower than this, it's already worth implementing, but there are further considerations.

Time Loss

Automations operate non-stop, 24 hours a day, seven days a week, with 100% accuracy.

Humans are not without flaws. We require frequent breaks, sick days, and holiday pay, and are periodically unable to perform our jobs effectively. According to research, employees lose 13% of their productivity simply by surfing social media.

To determine the actual value of automation:

  1. Calculate the time required for automation to finish the task.
  2. Calculate the time it would take a human to accomplish the work, excluding any errors, breaks, or blunders.
  3. Compare the two numbers.

For instance, one of your personnel members may follow up with consumers each quarter to encourage them to reorder. This takes four hours to accomplish, but 20% of that time is lost on breaks and other time-wasting activities.

Bottlenecks in Operations

Analyze your current procedures and create a workflow map, beginning at the end and moving backward.

Reflect on your historical performance at each stage of this workflow and identify areas where slowdowns have happened previously or may occur if your firm expanded.

For instance, one of our clients (Squiggle Consult) encountered a block early on in the customer journey. Each new lead needed 10-15 minutes of data input. This limited the number of leads that could be onboarded each day, hence restricting their business's development.

By automating this data entry, there is no cap on the number of leads that may be onboarded, therefore eliminating the bottleneck.

By automating these bottlenecks, you may boost productivity and lower the chance of additional bottlenecks.

Cost of Opportunity

Opportunity cost is defined by the Oxford American Dictionary as "the loss of potential benefit from other choices when one alternative is chosen."

This signifies, in the context of automation, what you will miss out on if you do not automate:

  • Reduced Costs: By using automation, you may lower the cost of producing things or providing services in return for a one-time investment in automation. Reduced expenses result in increased revenues, which may be reinvested in new ventures.
  • Reduce Lead Time: Automation may enable you to service consumers more quickly, resulting in a healthier cash flow. This also minimizes inventory and storage requirements for enterprises that sell tangible things.
  • Reduce Errors: Automation ensures that a job is completed correctly the first time. Customer satisfaction increases and labor expenses decrease when mistakes are eliminated.

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