Return on Investment in Operations

As our businesses are wholly customer centric with satisfaction and referrals generated from the relationship and our service more so than portfolio performance - soft cost reductions can be very valuable.

I recently worked with a group on an initiative to implement a document imaging solution. The hard costs were easy to identify - they believed based on evaluating the application solution that they would reduce those expenses by 35%. This was significant for them as it would pay for a third of the investment in the first 18 months. 

However, one of the challenges this group faced was staff spending more than half of their time moving paper and juggling research tasks just finding information. This left the team spending only a third of their time in interaction with customers. While no customers had complained about service - there was clear room for providing a deeper relationship to the practice for their clients.

We used a simple calculation that took basic administrative activities into consideration and discovered soft cost savings along could return the investment in less than 12 months.

 

 

Staff looking up files and documents

4

 

Average number of clients seen daily

6

 

Number of phone calls requesting information

10

 

Average number of issues to research daily

18

 

Number of trips to copy machine

24

 

Average hourly salary

$13.50

 

 

 

 

Trips to find information per day

38

 

Hours Spent Finding Information (10 min Each)

6.3

 

Hours Spent copying (2 Min Each)

0.8

 

Hours Spent Finding Info/copying

7.1

 

Cost Per Day

$96.30

 

Cost Per Week

$481.50

 

Cost Per Month

$1,926.00

 

Cost Per Year

$23,112.00

 

 

 

 

Estimated Cost of Needed Hardware

5,000.00

 

Estimated Cost of Needed Software

10,000.00

 

Esimated Cost of Needed Training

3,000.00

 

 

 

 

RETURN ON INVESTMENT IN 

9.35

mo

 

 

 

For this practice - gains were found on several fronts:

  • Efficiencies in the office - the team will have information at their fingertips without extensive searching
  • Hard costs will drop measurably
  • The team will have much more time to devote directly to clients
  • The practice as a whole can sustain more growth without hindering productivity of staff
  • Practice managers can reconsider hiring plans for the new year

The important variable to consider here is the increased level of direct service to clients. Can and will this result in an even higher satisfaction rate and drive new referrals? If industry experiences are correct - the answer is yes.

 

 


 

 

 

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