The high cost of good enough: bureaucracy and anti-bureaucracy

Find out the true cost of ad-hoc systems, paper forms and DIY spreadsheets and how they entrench bureaucracy and cost you money.

Man with head buried in the sand representing bad bureaucracy

Perfect is the enemy of good enough, as I have said before. But ‘good enough’ is the enemy of better. There are lots of examples where ‘good enough’ just isn’t good enough:

  • Any web browser that isn’t up-to-date when the latest versions are free, fast and more secure. We like Google Chrome here.
  • Buying a smartphone and never downloading an app.
  • Using Microsoft Windows XP as it approaches the end of its working life.
  • Writing something without proofreading it afterwards.

The high cost of making do

Many companies come to Turbine because they are discovering the high cost of ad-hoc processes, paper-based systems and over-reliance on spreadsheets when it comes to expenses, time-off requests and purchase orders.

Here is where you can save money by shifting from bad bureaucracy to a purpose-built online system:

  • De-centralising purchasing. A penny saved is a penny earned. By streamlining your purchasing, consolidating suppliers, negotiating with information and reducing the risk of over-ordering and overspending, you can cut the cost of purchasing.
  • Fraud and negligence. One in four small businesses are hit by fraud, according to the UK’s ActionFraud website, and losses in the UK were estimated at £18.9 billion. Informal approval systems don’t have audit trails and don’t enforce company approval rules.
  • Poor budget control. Unless it is visible at the point where a purchase or expense request is made and approved, it’s hard to make a budget stick. Making the budget visible can fight the fire of overspending.
  • Wasted time. A survey of more than 3,000 knowledge workers conducted by Basex found that workers spend up to 50 percent of their day managing information. Anything you can do to reduce that waste is expensive labour freed up for something more productive.
  • Wasted paper. A typical filing cabinet costs $25,000 a year to fill and $2,160 to maintain. All that printing costs money too.
  • Keep track of holidays and sickness. How easy is it for you to spot patterns of absenteeism? Can you tell if someone is risking burnout by not taking enough holiday? How long does it take a manager to check that an employee has enough available days for their latest holiday request? Time off management is much more than ticking boxes on a paper form.
  • Vendor over-invoicing. Between 10 and 40 percent of all invoices are disputed, according to Gartner, with an average cost of $20 per disputed invoice. If you can call up the original purchase order and cross-check an invoice, it’ll reduce the risk of overpaying.
  • Spreadsheets mistakes. The risks of using spreadsheets include transcription errors and formula mistakes. As many as 80 percent of spreadsheets contain significant errors.

These costs could be painful: a vendor overpayment, a day’s pay here and there, missed vendor discounts, days of people’s lives spent doing needless paperwork and data entry.

Bad bureaucracy means missing out

However, the real cost of paper and spreadsheets, is the opportunity cost. This is ‘the loss of potential gain from other alternatives when one alternative is chosen’. If you choose an inefficient way of dealing with paperwork, the opportunity cost is all the gains you could have won and all the losses you could have avoided by choosing a more efficient way of doing it. In other words, if paper keeps coming up, scissors beat rocks every time.

Do-it-yourself processes and spreadsheets held together with sticky tape give the illusion that paperwork is under control. Filling in a form feels like a businesslike way of requesting a purchase, claiming an expense or booking time off. But they stop companies making better choices that could save them money.

Worse, paper systems and ad-hoc spreadsheets make life more difficult for regular people. They entrench the power of the people who own them and increase the costs of bureaucracy. Automation and self-service is the antidote.

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