The 4 costs of manual data entry
As a business grows, the need to move away from manually entering and managing data grows exponentially. In this article, we describe what’s at risk by putting off automation.
How much time do you spend on manual data entry? Really think about it. Now, think about the rest of your business as well and consider all the hidden costs. Then, contemplate the cost. Write it down. We’re guessing that number is significant.
Now contemplate this: in a fast pace digital economy where business dealings continue to grow in complexity, is your manual data entry going to grow? Will it be more time-consuming or less time consuming? If your answer is yes to both, perhaps it’s time to reconsider.
1. The cost in dollars and ‘sense’
In our experience with growing businesses, manual data entry is commonplace. At the start it just made sense, it’s an easy solution and processes could be easily completed. But as time goes on becomes less scalable and less cost-effective. Let us explain.
Consider this simple exercise to assess the costs of having staff manually enter data. Let’s presume it takes an average two to four minutes for one staff member to complete a process, like updating an invoice, inventory numbers, or recording a transaction. It could be longer for less skilled or experienced staff.
Then multiply that by the average number of processes or tasks they would do in a day, that could be 30 a day or 660 a month. Then multiply that by the amount of staff and you have your hourly cost.
Now factor in the cost of their wages. Would that productivity and outlay be better spent on value add activity?
2. The impact of human error
In 2008, a report from global analyst firm IDC, estimated the cost of human error is costing businesses in the US and UK £315 per employee per year or £18 billion dollars for each economy.
Then factor in the time spent double-checking information. If each month you’re double handling information or correcting mistakes human errors could feasibly double the cost of data entry. Not to mention the tangible costs of fixing mistakes like courier costs for incorrect orders or refunding incorrect orders.
If you add the estimated costs of errors to our previous example the costs continue to climb. So too, the implications of those errors.
How long are you going to retain a client when you continue to mix up their orders?
3. The cost of delay
Entering information manually in to multiple systems takes a lot of time. You spend a lot time waiting for information to be updated at different stages in the process.
Now think about the impact on your ability to make decisions about fulfilling new orders or ordering new inventory. Without up to date, accurate information the result could be a loss of revenue and a loss of face with your client.
4. The cost of bad data
A typical data entry challenge that operators run into is missing values. Assigning blank values, meaningless substitutes, default values or the first entry that appears in a box can create discrepancies in the desired output. It can be the product of poor training or unfortunately human laziness. But the result is that someone must clean the data. And that means a loss of time and money.
What’s the remedy?
One way to reduce manual data entry is to automate your processes.
We’ve previously detailed this in our whitepaper – 5 ways to improve business process. In summary, the key is to map key processes, find inefficiencies and leverage technology to automate or improve these critical and time consuming manual processes.
Automation requires business choices to be made, key to this change of course is connecting your business systems. As we discussed in a previous MYOB whitepaper, the benefits of a connected system is that it lets you access that crucial information instantly from a single point of truth, on any device, wherever you are. Integration means no more mucking around with data extraction and reconciling conflicting sources; just clean, visible data that offers better, more up-to-date information for quick and accurate decision-making.