In short
- Start with the cost of the current process: documents per month × minutes per step × hourly rate.
- Add corrections and follow-ups - they often eat the most time.
- Payback = implementation cost ÷ monthly saving (minus the running cost).
- Do not assume 100% savings - use a cautious assumption and check it in a pilot.
- Some benefits (fewer errors, faster customer service) are hard to price but real.
Step 1: work out the cost of the current process
List the steps of the process and for each estimate the time per document and the rate of the person doing it (the employer's cost, not net pay). The monthly cost of a step is: documents × minutes ÷ 60 × hourly rate.
Count corrections separately: what share of documents comes back for follow-up and how long one follow-up takes. This is often the most underestimated part of the cost.
Step 2: estimate the real saving
Automation rarely removes all the work. Retyping data can disappear almost completely, but checking and approval usually stay - just faster. Use a cautious assumption for each step separately and add them up.
Subtract the monthly running cost of the solution from the saving: servers, licences, support.
Step 3: work out the payback period
The payback period is the implementation cost divided by the net monthly saving. If it comes to a few months, the decision is easy. If it is several years, narrow the scope to the steps that give the most, or look for a simpler solution.
Benefits that are hard to price
- Fewer errors in documents and fewer corrections at customers.
- Faster service - an order handled the same day instead of the next.
- A full history of who changed what and when - useful for complaints and audits.
- Less dependence on one person who "knows how it is done".
- Data in a system instead of binders - reports without manual collection.
Common calculation mistakes
- Net pay instead of the employer's full cost.
- Leaving out corrections, follow-ups and searching for documents.
- Assuming 100% savings instead of a cautious estimate.
- Leaving out running costs and user training.