Inspired by our friends over at Warranty Master™ who posted on The True Cost of Slow Computers, here is a quick look at one of the thing we talk about a lot in our presentations every week: The True Cost of Bad Documentation.
In business, there are three main drivers of excellence: People, Technology & Process. All too often, the latter becomes an afterthought. Did you know that North American businesses are estimated to be made up of over 60% waste? In LEAN, this is known as “leaky bag”.
Why bad documentation hurts you
Most people agree that IT folks spend around 20% of their time just looking for information – e.g. researching, shoulder-tapping, Googling, etc. When we place some numbers to this waste, the dollars associated will shock & amaze you. Let’s do a quick analysis of a typical IT provider with 10 employees:
- Average salary – $60,000/year
- Average hourly labor rate (fully burdened) – $43/hour
- Time wasted due to bad documentation – 20%
- Annual cost of time waste – $13,760 per employee
- Annual opportunity cost of time waste – $34,400 per employee
What is opportunity cost?
Put simply, opportunity cost is the amount of production that each employee could have produced, had they not been wasting their time looking for things. Most IT service providers who would want to charge at least 2.5x the hourly rate (in this example, $107.50/hour).
For a 10 employee company, we are looking at $481,600 in waste, every single year. Now, if good documentation could cut that number in half, would you be interested in saving/creating $240,800 per year? It might be time to look at a solution which can help you achieve that.