What manual data entry really costs (and how to work it out in 5 minutes)

"It only takes a moment here." I hear it at almost every company. Then we sit down with a sheet of paper and the "moment" turns out to be half a full-time job. Below: the formula, three real processes from one company and four things nobody ever puts into Excel.

The formula

minutes per run × times a day × days in a month ÷ 60 = hours a month
hours a month × hourly rate = monthly cost

To the hourly rate add the employer's social security contributions, holidays, sick leave, equipment and a desk. For an employee on PLN 6,000 net the true rate comes out at around PLN 60 to 70 an hour. Measure the minutes with a stopwatch. When I ask, people say "five minutes", and the stopwatch shows twelve, because nobody counts looking for the email, switching windows and asking the customer to clarify.

Three processes from one company

A trading company, 14 people, wholesale parts. We spent an hour counting with the owner and two people from the office.

Three processes, 100 hours a month, almost PLN 7,000. Before we counted, the owner was talking about two or three hours a week. He was off by a factor of ten, and he's no exception; I usually get a multiplier of five to ten.

What Excel doesn't show

Errors. A wrongly typed quantity means a return, a courier both ways and an annoyed customer. At this company it happened two or three times a month. One such case costs more than an hour of work, and the customer remembers it longer than you do.

Delays. An order that came in at 17:05 sits until morning. For the customer that's a day longer to delivery. In this industry the competition stocks the same goods, so whoever ships tomorrow wins.

Opportunity cost. A sales rep who is retyping isn't calling. An accountant who is hunting for invoices isn't analysing margins. This is the biggest item and it's never in the spreadsheet, because you can't measure it directly. My rough estimate: how many orders the rep would close in those 34 hours if he spent them on the phone.

Staff turnover. Nobody likes work they know "could be automated". At this company the person doing the retyping changed roughly every eighteen months. Recruiting and training a replacement is more weeks, and for the first month there are more errors.

Tip: There's a calculator on the site that runs this formula for you, with a yearly result. Thirty seconds. Enter minutes from a stopwatch rather than from memory.

Where to start

The biggest process is rarely a good first candidate. Ask yourself two questions: does the process repeat every day in the same way, and is the data already in a system somewhere (email, spreadsheet, online shop) rather than in someone's head? If several processes pass both tests, pick the one that hurts a specific person; they'll want it to work, and they'll tell you when it doesn't.

A process like that gets automated in a few days and the effect shows immediately. The next ones come easier, because people in the company have seen it work and start bringing ideas themselves. At the company from the table we started with orders. Invoices came a month later, and customer questions a month after that, once it turned out that 25 questions a day were 80% the same four.

How we count it in a quote

With every quote you get two numbers side by side: the cost of the build and the monthly saving calculated with this formula, on your minutes. If the second isn't clearly bigger than the first divided by three, I advise against it. That happens with roughly one company in five. Automation should pay for itself within a quarter.