When do the benefits of AI outweigh the costs?

What is on the benefit side

• Manual work that disappears. Preparing quotations, writing emails, processing invoices. You count that in hours per month.
• Less work left pending. A quotation that goes out on time, a supplier invoice that is in the books on time.
• What was not feasible before. What you left aside because it was too expensive or too slow is now possible.

What is on the cost side

• Implementation. The build or the subscription, and the time your team needs to set it up.
• Use. What the system costs per month to run.
• Checks. Spot checks and reviewing outcomes, especially at the start.
• Maintenance. Back-ups, monitoring the connections, and updating when your processes change.
• Correcting errors. Mistakes that still slip through, and what it costs to put them right.

Whether you rent or have it built mainly changes this side. That trade-off is covered in Rent AI software or have it built?

Savings or capacity

Hours freed up are not yet a saving. They only become a benefit once you choose what to do with them. If you hire in less, calculate with what those hours really cost. If you help more customers, only count revenue once that work is actually sold. Deduct the cost of the extra work from that extra revenue as well. If the time goes into better work, measure the quality. Finally, compare the one-off investment with what is left net each month after that.

A worked example from practice

At an SME with two locations we spent two days building the system, one on site and one remotely. After that, quotations, customer correspondence, administration and marketing ran there without a manual step. We counted the volumes for one month in the log files of the system. For each action we estimated conservatively, an email at ten minutes and preparing a quotation at twenty. That puts the manual work that disappears at 117 hours a month. That is a calculation, not a measured time saving. Converted, it is 0.7 FTE, a conversion of hours and not a demonstrated saving in staffing costs. The calculation does not show how much time checks and maintenance take there.

Measure in advance

A calculation afterwards needs a comparison. So set down in advance how much work there is now and how long it takes. The future-proof scan can serve as a baseline, for your management or an investor. Agree in advance whether that baseline also covers volumes and handling times. And agree when you will redo the calculation.

Where it goes wrong

• Counting only the licence. Include the costs of running the system, checking its output, maintaining it and correcting errors.
• Counting hours that go nowhere. Then the gain only exists on paper.
• No baseline. Then there is little to compare afterwards.
• Work that rarely recurs. Then the value per occurrence must outweigh the costs.

What this means for you

The calculation in this article only works with your own figures. How often does the work recur, and what does an hour cost you? During an introductory meeting, we go through your processes. Together we look at where time and money leak away.