Cost-saving strategies: Automate clerical processes

Rather than looking at cost-saving opportunities only within the IT department, the IT manager can use technology to facilitate cost savings throughout the company. Here's one way:

Description
Automate clerical tasks and processes in order to reduce the number of employees required to do a certain job, or provide the capability for existing staff to handle more.

Type of cost savings: Indirect
Task:

• Identify large groups of clerical workers in your company.
• Quantify the tasks or processes that can be automated.

Examples of areas with automation potential:

• Repetitive tasks in manufacturing processes
• Billing and collection
• Accounts payable
• Data entry processes
• Registration applications
• Paperwork filing and retrieval operations
  - Legal files
  - Medical records
  - Payroll and HR
• Order entry and inventory control processes
• Data interface opportunities between business applications

Quantify: Medical billing departments and other industry billing departments that run manually and process paper claims can cost the company 5-7 percent of revenue or more. Automating the clerical billing and collection processes can reduce the cost to 1-3 percent of revenue—quite an impact.

Likewise, the order entry, purchasing, and accounts payable processes, as well as the paper flow activities between a retail organization and its vendors, has significant savings opportunities by automating much of the process. To estimate your cost savings opportunity, follow these steps:

• Define the automation initiative
• Estimate the reduced headcount potential
• Calculate the potential savings:
  # of eliminated employees x annual salary _________
  # eliminated employees x benefits factor _________
  Employee related expenses:
  a. Recruiting and hiring
  b. Training
  c. Administrative
  d. Supplies
  e. Other
  

Investment: Typically programming or process control equipment and implementation costs

Tips:

• Gain support from department head, CEO, CFO, and key managers.
• Work as a team. IT role is facilitator, not "driver."
• Formalize project initiative.
• Track milestones and results giving credit to appropriate department.

TechRepublic originally published this article on 10 November 2003.