The Cost of Putting Off that Evaluation

I talk to a lot of credit unions and banks that tell me they planned on looking at a particular system to evaluate if they could use it more efficiently or expand its use to other parts of the organization, but they were not able to get to it.  It is not surprising to me that they don’t get around to it.  It is actually pretty common. Internal projects often get pushed out in favor of customer facing projects or shiny new technology.  What is a surprise though is how long they have been planning to “get to it.”  I always ask how long they have been discussing the current usage of their software, and it is usually since they initially installed the software.  This is sometimes five years or even ten or 15 years.

What is interesting to me is the cost of putting off the evaluation of their current software.  Most organizations only use about half of the features within a particular software solution.  Common sense would tell you that there are probably features not being used that could increase efficiency and reduce costs for the organization.  There are probably areas of the software that are being used less efficiently than designed as well.  Without performing a full evaluation to understand how you can use the software more efficiently, we can’t figure out the true cost of not using the software correctly, but let’s take a hypothetical look. 

Let’s say you save about 10 hours a week of work for the organization by improving the usage of one system. In my experience, this is easily doable.  We typically see around 20 hours per week that can be saved.  It could be through business process automation, improved workflows, or just implementing unused features.  If the employee(s) costs the organization $20 per hour, then the cost of incorrect software usage is around $10,000 per year.  Easy math.  However, this does not include hiring costs of that employee, benefits, or overhead to provide a workplace for them. 

More importantly, this example does not consider what was done to save ten hours per week. You could’ve automated tasks that eliminated manual errors which could’ve costs the credit union money and time to correct. These variables are hugely costly as well.  It also does not consider growth which could compound the cost over time.

Just looking at the payroll costs of those 10 hours at a conservative pay rate, it seems like the time and cost of an evaluation of your software is well worth $10,000 savings per year, which is also very conservative.  Putting off the decision to address the current systems is costing almost a $1,000 per month in this example.  In reality, it is much more.

To conduct a thorough evaluation of the systems used in your operations, you need to understand everything about the software and the organization’s operational processes.  If you do not have the knowledge or the resources in your organization, you should look to an outside company like Solution Optimizers to help you with the evaluation. 

Using an outside company has a lot of advantages.  Their job is to know everything about the software and your industry.  When you bring in an specialty company, the system knowledge in your organization immediately increases.  They can also perform the work without requiring many resources from your organization.  And most importantly, they bring experience.  Outside companies that specialize in optimization of your system work with multiple organizations and have seen the software work in several environments. They can bring in ideas of how to better use your software that you may never think about. They may have seen the software work better in other organizations and can bring those ideas to you as well. 

Regardless of whether you perform the evaluation yourself or you hire an outside company, stop wasting money by pushing off your system evaluation.  There is no better way to increase productivity than to use your current tools more efficiently.