One of the things I see quite frequently in business is that new, supposedly optimal processes are introduced without a full examination of the cost. It is a difficult problem because figuring out the full cost is shockingly difficult. One of the big culprits is offloading work to the crowd.

Twenty years ago nobody filled out their own expense reports. There was some person who was expert at filling out expense reports and you took that person a bunch of receipts and they dealt with it. Magically a few days later your expenses were paid. Those days are gone, instead you file your own expense report through some piece of software.

I am totally incapable of correctly filling in an expense report correctly. Last time I did one it took five tries to get the report right. I’m kind of dumb but I bet that most of the expense reports which go into that system are rejected the first time. But because the system is in place there is no need to employ that expense report specialist who existed 20 years ago. Cost savings! Right? Probably not because most of the people who are now filling in expense reports are earning more than that specialist, they’re taking more time to do the reports and they’re having to redo the reports.

Another great example somebody told me about was adding a card scanner to the office printer. The goal is to prevent people printing things and then leaving them on the printer. Apparently this is a huge cost. Millions of dollars are being wasted by unnecessary printing. Now everybody uses their keycard to activate the printer. On the surface this is a great idea but there are hidden costs. People feel like they’re being spied upon, people have to remember to bring their swipe cards to the printer and people can no longer send print jobs to remote printers for somebody else to pick up. There are hidden costs here too.

These are just a coupple  example, I see lots of others. Heck, I write lots of others. If you’ve ever seen an initiative with the words “self-serve” in their name then you’ve got a crowd sourcing initiative. It can be great to empower people to solve their own problems through a self-service model but keep in mind that there is a cost. Sure there is no longer a line item in the accounting department’s budget for an expense expert but now that cost is spread out all over the company  If you get enough of these initiatives then they start to detract from the time people spend on the core functions of the business. Now the cost is not only that you’re paying an expensive engineer to do expenses but that engineer no longer has time to do engineering which is where you earn your money.

Watch out for those hidden expenses!