Wednesday, September 14, 2011

Time is Money... and so many people forget that in so many ways...

The alt text reads: "And if you drive a typical car more than a mile out of your way for each penny you save on the per-gallon price, it doesn't matter how worthless your time is to you--the gas to get you there and back costs more than you save".

When I was growing up (and before she lost her license for good when I was 14... though she got it back again ten years later in Arizona) my mother used to go LITERALLY miles out of her way, to avoid having to make a left turn across traffic, or at a busy traffic light; or to avoid a few lights. Not only were we traveling a much longer distance, but it was taking longer and wasting more gas, just so she didn't have to wait for traffic.

She would also drive three towns over for gas that was three cents a gallon cheaper, when she was buying six or seven gallons. 21 cents?   For an extra 30 minutes, and an extra gallon of gas (at the time about $0.90), to save $0.21

But she FELT that she was "saving". She was "getting a better deal".

Well... No... she wasn't. But she FELT she was, and of course, there's millions out there just like my mother on this issue.

One of the things I run into a lot of the time in my business, is the idea that someone is "saving money", buy doing things that take hours and hours (at $100 per hour per man or more) to save a few hundred, or even a few thousand dollars.

When it takes four guys, 20 hours each, to save $5,000 once... that's not saving, that's losing $3,000 (for guys like me, it's a lot more, as my internal cost is something like $145 an hour, for a loss of almost $7,000).

Now, if it takes four guys, 20 hours each, to save $5,000 every week for a year... That's saving money. Hell, if it's eight guys, 100 hours each, it's saving money.

Travel and expenses are one of the biggest areas I see companies nickel and diming things; trying to save money by choosing crap flights, remote hotels, not renting cars... when they cost tens, or even over the course of a year, hundreds, of hours of their employees time.

One company I deal with is a perfect example: They have a policy that you must always book the lowest cost flight with less than two stops, on the lowest cost carrier. Now, I don't know if you're familiar with airline schedules, but I'll use one I'm familiar with directly to  illustrate my point.

United has two direct flights from Spokane to San Francisco a day, and the reverse route; an early morning flight, and a late night flight, with a flight time of 1:45 to 2:05 (it's 730 miles), at a price of between $370 and $490 dollars for more than 24 hour but less than 30 day booking (most business flights are booked less than 10 days in advance).

Delta services the same route, twice a day, for $249 to $369 dollars, and thus under policy they must always book the Delta flight.

Great, every time they fly they're saving $120 to $240 right? If they fly twice a week every week, that's as much as a $24,000 savings...

Well... on the flight, sure... but what AREN'T you seeing?

The United flight arrives in SFO before 9am, or leaves after 8pm (which means you don't need to be at the airport 'til 6pm). The Delta flights depart at 10:30am, and 6:30pm, meaning you have to be at the airport by 4:30pm, giving you only a half work day on the return flight day.

Not only that but they're one stop flights, through Salt Lake City. It's 1:45 from GEG to SLC, then a 2 hour layover, then another 1:45 from SLC to SFO (and the reverse is true), a total enroute time of over 5.5 hours. Adding the time to transit to and from the airport, and clear security, and that's one full work day.

So, your $24,000 savings over the course of a year, is actually 75 man days of lost work (vs 0 man days, since the United schedule allows a full work day on each travel day). In my case, that means a $90,000 loss.

Not providing remote data networking (air cards, mifis etc...) same thing. $80 a month enables a $140 an hour staff member to work anywhere, anytime, with security. Sadly, though airports and hotels often have wifi available, that WiFi is frequently insecure, slow, and often doesn't support the VPNs and secure authentication methods that most companies require for remote access; and of course, most vehicles (cars, busses, trains whatever) don't have network access. A wireless 3g/4g hotspot costs $80 a month, and enables data access at a minimum of 512kb, and up to 10mb, for up to five people, anywhere you can get signal (which is most any major urban area or along most interstate highways). The first HOUR I spend working from an airport pays for that MiFi every month. Even a $40k a year guy costs the company $65k a year (or more); and so it takes two and a half hours to pay the cost back.

If you consider again, that hourly rate, and we presume 100 workable travel hours a year (and there have been years where I was running more like 500 workable travel hours)... $8,000 lost vs $960 paid...

Save money where it makes sense, sure; but do the cost benefit analysis.