Show Me The Money

Separating fact from fiction in IT productivity projects

Missed TargetAn IT team basked in the glow of their achievement. They had replaced large, office printers with personal desktop printers at a cost of $20,000 – a move predicted to save $50,000 in payroll expenses… annually!

Based on a workflow study, the IT team calculated that office workers could save about ten minutes per day by cutting out their walking time to and from the central printers. Multiplied by the number of workers and average wages, “Voila,” $50,000 per year.

Be Careful What You Ask For
I was asked to follow-up on this project. While debriefing the team, I asked: “Who is being laid off?”

They were solemn a moment, contemplating their culpability in people losing their jobs. But then they looked a bit puzzled and answered, “Well, no one we know of.”

As it turns out, most workgroups were small, only five to fifteen people. Saving ten minutes for each of fifteen people is only two and a half hours per day. Even if they had interchangeable skills and responsibilities (which they did not), two and a half hours was not enough for any group to warrant even one less member.

Next question: “How many hours of overtime will be reduced?”
Answer: “Probably not much.” More than half the employees were salaried and there wasn’t much overtime among hourly staff.

Finally: “So where will payroll expenses actually go down?”
Answer: Cue the crickets chirping.

I really hate days like this. Teams feel ambushed by questions they haven’t faced before, especially when their status drops from hero to zero.

Incremental Fiction
This is, unfortunately, too common in productivity initiatives.  This company will eventually get more done with fewer people or get better work from the same number of people… but not immediately. Those desktop printers will probably wear out before even their cost is recouped.

The problem lies with an incremental calculation, taking a per person saving and multiplying over an entire organization. If this team had prepared “Before & After” expense scenarios and then asked department heads if they would deliver the “After” payroll expense projections, the answer would have been a resounding “No!”

Perhaps the people will use the additional ten minutes to get more done, though for salaried folks this is rarely the case – they have fixed responsibilities. Even for hourly folks, work tends to expand to fit the time (read “eight hour days”) available.

Show me the money… or no deal.

© 2013 Verax Point

About Dave Wittenberg

I am all about equipping business teams to enjoy greater payoffs on their biggest bets. I bring a unique combination of evaluation expertise and behavioral insights developed over the course of more than 300 major strategic initiatives. Applying a highly effective, disciplined framework, teams unleash their full capabilities to generate better solutions, wring out hidden waste, and deliver superior returns. Specialties: Investment Evaluation, Decision Excellence, Strategic Analysis, Mergers and Acquisitions, Investor Relations, Leadership Development, Education & Training
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