How is it calculated?
- Re-entry cost = number of people × weekly hours × 48 weeks × hourly cost
- Report cost = monthly report hours × 12 × hourly cost
- Error cost = errors per month × 12 × cost of one error
None of these three items shows up on any line of the budget: they get lost in salaries, in overtime and in errors written off as "these things happen". That's why, when the cost of software is discussed, it is usually weighed against zero. The real comparison is between the cost of the software and the annual total in this table. More on this in the Excel to ERP article.
Frequently asked questions
How do I estimate the weekly time spent re-entering data?
For one week, ask a few people on the team to note the time they spend typing the same information in a second place, looking for files or asking "which file is the latest?". In most companies it comes to 3–6 hours per person per week.
Which errors should I count?
Wrong or incomplete orders shipped, work stopped because of missing materials, deliveries never invoiced, quotes sent with the wrong price, missed deadlines. As the cost, enter the repeat shipment, the overtime, the discount given or the profit lost.
Does software make all of this cost go away?
Not all of it. But when information is entered once and read from the same record everywhere, most of the time spent on re-entry and manual reports disappears, along with most of the errors caused by files that don't match.
Are the numbers I enter sent anywhere?
Not unless you send them. The calculation is done entirely in your browser and nothing is saved. Your figures reach us only if you fill in and send the “Evaluate my result” form, so that we can get back to you.