Why is Time-to-Value so Important? Impacts on Costs, Quality, and Employee Focus

Why is Time-to-Value so Important? Impacts on Costs, Quality, and Employee Focus
January 20, 2018 Michael Gerthe

“Time-to-Value is defined as the time it takes a new product to provide its advertised value to a customer. The definition is easy to understand, but it’s the influencing factors that are more difficult to assess and compare. For SaaS, the most important influencing factor to compare is implementation and deployment.” 1

Why is Time-to-Value so Important? Impacts on Costs, Quality, and Employee FocusIn considering a new solution, why does Time-to-Value matter?

It matters because the impact on you and your company is huge.  It’s not just the ability to get your application up and running faster – the implications go much further.

When you are shopping for solutions, know that every solution is going to have its own onboarding process, which can be as straightforward as an in-app wizard, or as complex as a data integration and product configuration/customization project done by a professional services team.

Right there — those dollar signs that flashed in your eyes when you read “product configuration/customization” and “professional services team” — are only one reason to pay attention to a product’s Time-to-Value.

Resource impact on Cost.

If you are using implementation consultants, the cost savings of not needing them is an easy calculation, and not an insignificant amount.  But the resource story does not stop here.  Are your staff working for free?  Do you have so little on your plate that you need to have something to keep them busy for 3 or 4 (and often times 6 or more) months?  Of course not.

Don’t consider your in-house staff “free” resources.  The fact we call them resources implies that you can efficiently leverage them for value, or waste their value through poor allocation.  Just like money, equipment, and raw materials, using them efficiently is a competitive advantage for the business.

Use simple calculations to figure out your human capital cost.  Most people have a handle on the external costs.  You see a bill and budget spend, so you know the cost.  Do you believe the planned spend will match the actual spend in the end?  In estimating, you may wish to add a reasonable padding of 20%-30% more in your plans.  You can’t blame the implementation consultants when something gets discovered in your systems that slows down the configuration or integration efforts.  You will need the budget padding to cover it.

Number of Consultants (or vendor resources) X Rate X Hours = External Costs

The following calculation is one few people take the time to figure out.  And the number is not small.  We recommend getting the burden rate from Finance.  This is a truer number as it bakes in the costs not captured in base salary.

Number of Staff (IT/HR/Payroll) X Monthly Burden Rate X Project Months = Internal Cost

Example: Time-to-Value of 4 months vs 1 month

4 Month implementation
4 staff (2 IT / 2 HR) 
Annual Burden Rate $100,000
Cost = $ 133,333
1 Month implementation
4 staff (2 IT / 2 HR)
Annual Burden Rate $100,000
Cost = $  33,333

Imagine if the implementation took only 4 weeks and required only 1 person.  The cost drops to $ 8,333!  That’s a resource reduction of almost 94% — and yes, that is a realistic expectation.

The argument can be made “These people are not always 100% dedicated to the project.  They do other work during that time too.”  This is often true.  Not many companies have the resource levels to dedicate staff solely to one project.  But if we hold the assumption of “fully engaged” across all options being considered, you will have a standard approach to your numbers which will allow you to compare options for your consideration.

To the point “They do other work”.  That leads to our next resource impact – Quality.

Resource impact on Quality.

What do we say to our staff when we add a project on top of a regular workload?  “You should be able to Multitask.”  That is right up there with “You need to do more with less”; easier said than done.

If problem solving and creative thinking are not needed for your project’s implementation or configuration efforts, the information below may not worry you so much.  Of course, I’m kidding you. Please read on.

There is plenty of information out there on how multitasking is a myth.  Studies have shown it can actually harm performance on creative problem-solving tasks.  Multitaskers often find it harder to generate spontaneous “a ha” moments because they use up their “working memory” and end up taking away from their ability to think creatively.

Moving back and forth between several tasks actually wastes productivity.  More mistakes are made when the focus is split between too many projects.2  Details slip by and are missed.  Energy is expended when switching between projects.  Additionally, you never fully focus on any of the tasks you are working on.3  Further, research has also shown that retention levels can drop from 90 to 95% of pertinent information to only 40% when we are in multitasking mode.  Get 40% less done and only 40% retention of pertinent information.

You should be seeing a snowball effect here.  The time period we spend multitasking produces results at a slower pace.  This same work is subject to errors and omissions, increasing the time and effort required to fix the mistakes.  And on top of this, we are solving problems while our creative problem solving ability is handicapped.  As a result, all of this further extends the period of time we are in multitasking mode trying to get the work done.

Instead of leveraging the old sage advice “Work smarter not harder”, the common solution to the challenge presented by decreased results against unmovable established deadlines – work longer.  These late nights, early mornings and weekend hours are not only the exact opposite of any “work/life balance” companies may advocate, but tend to further erode the quality of the results.

Between the multitasking and long work hours, quality is under attack.  The reward to your weary troops for getting through months of implementation or configuration; Go Live!  Now any mistakes made will be visible for all to see.

A faster Time-to-Value translates into a much shorter project.  This has an exponential impact on quality, or at least a number of factors that work against quality.  If you reduce the project time line by half, and consider the snowball impact of the multitasking period and related long work hours, the improvement it makes will naturally significantly exceed 50%.  As if anyone would say no to just a 50% improvement.  A difficult thing to measure, but according to the studies we should expect improved cognitive abilities in problem solving and creativity, and less time spent at a lower productivity rate.ii   An added bonus, when you do go live, your staff are not burned out.

Resource impact – Focus

Focus as in where you spend your time; what gets your attention.  Some say “what is important gets done”, or basically it will get your focus.  I don’t agree.  It would be true except for the reality that sometimes basic things take all the time and do not leave room for the higher valued activity.  I know, that almost sounds like an HR job description, doesn’t it?  Let’s look at how Time-to-Value can help here.

We have all heard “Past behavior is a predictor of future behavior”.  If your software package took a team of people many hundreds or even thousands of hours to setup and configure, what are the chances a last minute business need would be a quick fix?  Conversely, if the same software took less than 10% of the time and effort to produce the same results, is your confidence higher that a quick fix is possible?

Time-to-Value is a strong indicator of how agile the software is.  Notice I did not say flexible.  Two packages could be equally flexible in what you can make them do.  However if one takes a month to apply the change and the other takes a day, both are flexible but only the second one is agile.

What does this agility lead to?  Better business alignment, or in other words, a better focus on business needs.  If you were in the Oil industry in the fall of 2014, you had to rethink compensation planning in light of dropping oil prices.  Not in Oil?  Remember the last week of November 2016 and the sudden change in what you thought the FLSA rules were?  Having an agile solution helps not only in such drastic changes, but in many other smaller business driven changes as well.

Consider the process you are running.  When something system related comes up, a large part of your day, if not your week, may be spent on getting the resolution in place.  Here again Time-to-Value offers a reliable yardstick.  A software application, such as Dartican’s CompAccelerator, that is easily and quickly configured is likely easier and quicker to administer.  The impact?  A greater focus on the process and less on the software.

In the case of a compensation planning process, should HR be in their offices working through application issues or sitting down with managers offering guidance on the process?

In short, Time-to-Value in the SaaS market place can be a window into how easy a software solution will be to work with.  The easier it is to work with, the more your focus can shift to the process and finding solutions that deliver higher value for the business.  A bonus is the improved support HR will give to business leaders will lead to a smoother process with greater manager engagement.

About Dartican

Dartican provides on-demand software, enabling businesses to manage compensation data and decision-making to control costs, boost efficiency, and retain top talent. Dartican solutions increase HR productivity and workforce engagement, improving business results and maximizing an organization’s return on it’s investment in Human Capital.