Is it worth automating this process?
Now it's time to consider the effort it will take to build the solution and decide whether it's justified. This involves weighing business value against the cost of automating the process. Business value is the ongoing benefit that the business receives from the project.
The cost of doing nothing
To figure out whether it's worth automating the process, you first must understand the cost of not solving the problem.
As a part of defining the business value that you hope to achieve from the Microsoft Power Platform solution, you should get a better understanding of what it's costing your organization to solve the problem in the current manner. In other words, measure the cost of doing nothing.
To calculate the current cost, identify the time spent doing the current process and multiply by the cost of the people performing it. You can measure the annual cost by determining the cost of running the process end-to-end once, then multiply by the number of times you do the process in a year. Add in any other costs such as software licenses, paper, postage, and so forth.
Example: The cost of the current expense process
The first thing we need to understand is, what is it costing the organization to continue to do the expense report process manually? Here's what we discovered when we talked to our colleagues:
We found that it takes them roughly an hour each week to pull together all their receipts and fill out the manual expense report. Abhay indicated that there are about 140 expense reports per week. We also learned that the fully loaded cost of each team member is roughly $90/hr.
(140 expense reports × 1 hour/week) × $90 = $12,600/week
52 weeks × $12,600 = $655,200 a year
Nick isn't reviewing or approving the expense reports; that's all falling to Abhay and the team to complete. Because Nick's not regularly monitoring the team's expenses, an important opportunity to sanity-check the expenses, watch for fraud, and optimize the team's spending habits is being missed.
Abhay shared with us that the team spends roughly 15 minutes per expense report, receives on average 140 reports a week, and sends back 25 percent of those due to missing information.
Initial review: 140 expense reports × 15-minute review = 35 hours
Initial review: 35 hours × $90 = $3,150 a week = $163,800/year
Rework review: 35 expense reports × 15-minute review = 8.75 hours
Rework review: 8.75 hours × $90/hr = $787.50/week = $40,950/year
Total weekly cost: $3,937.50
Total annual cost: $204,750
After the expense report is verified to be accurate, it takes roughly 7 minutes per expense report to look up the general ledger codes for each expense category and write them on each expense line of the report.
140 expense reports × 7 minutes of coding = 16.5 hours/week = $1,485/week = $77,220/year
It takes roughly 10 minutes per expense report to create a payment journal in the financial system to process for payment and appear on the financial report for Charlotte.
140 expense reports × 10 minutes = 23.8 hours/week = $2,142/week = $111,384/year
Charlotte would like to review the budget each week, but isn't able to get the report until Thursday, after Abhay has completed the review and gotten back the reports that had missing information. (Although this isn't a monetary cost, it does have an impact on the business.)
The entire process is costing the company:
$655,200 + $204,750 + $77,220 + $111,384 = $1,048,554
