How to Save $90K on Contract Reporting

Charities in the care sector often pull together their contract reports manually. This involves logging into various systems, running reports, downloading them into spreadsheets, and sometimes using horrendous macros that an IT guy wrote 10 years ago, which no one knows how to change.

This is a mindless, demoralising task for the team leaders responsible for it, and I'm constantly impressed by their stoicism. But there's a big hidden cost here that we need to consider when deciding whether to invest in automation. (Deciding not to do something—or to maintain the status quo—is still a decision.)

On the surface, it makes sense to avoid spending a chunk of money on building integrations by having humans do this work once every 6 or 12 months. But on closer inspection, any care organisation with more than a hundred people is losing the opportunity to service tens, even hundreds, of clients.

Let me make the case for delivering more impact by making a one-off investment in building some automation.

Let's imagine a service provider with a funding income of $10M. That's typically around 100 to 120 people and about 10 funding contracts. Putting an opportunity cost on this involves measuring:

• Time spent by team leaders every year doing manual contract reporting

• The ongoing costs of not capturing contract reporting information at the source

If a team leader spends one week every six or 12 months collating data manually, it doesn't sound like a big deal. But if we multiply that by 10 (because we have 10 contracts), it quickly becomes significant. Taking leave into account, that's 3 months of effort. At industry averages, that's around $22K, which conservatively equals 400 hours of face-to-face client time (assuming workers spend around 50% of their time with clients).

There's a bigger opportunity cost here because, in my experience, the source systems rarely capture all the contract-relevant information. The day-to-day impact of tracking and entering this information into spreadsheets (so it can be collated at the end of the reporting period) is a hidden cost.

In an organisation of 100 people, my most conservative modelling says that around 0.75 of an FTE is wasted in spreadsheet-based record-keeping and rekeying information in swivel-chair integrations required for payroll, billing, and scheduling.

Based on industry averages, this is around $66K a year, or conservatively 1,600 contact hours.

That's roughly 1.5 worker FTEs based on the same assumptions as above.

So if I spend $90K, I get a payback of $90K in the same year in contact hours, and then another $90K payback every year after that.

And we haven't considered the opportunity cost of any supporting teams like finance. We also haven't considered the positive impact on staff retention by removing mindless activities from people's day-to-day jobs.

The exact numbers might vary in your organisation, but in most cases, they're pretty close.

The above is for a $10M organisation. The numbers become far more compelling the bigger you get because these inefficiencies don't increase in a straight line; they escalate faster as the organisation grows.

Andrew Walker
Technology consulting for charities
https://www.linkedin.com/in/andrew-walker-the-impatient-futurist/