ROI of the Integrated and Automated Agency Operating Model
Agencies are feeling unprecedented pressure to be quicker, faster and better at everything they do. It’s more important than ever to be nimble, flexible and able to pivot at a moment’s notice.
You don’t have time to waste entering the same data into multiple systems or hunting and gathering data when you’re trying to make critical daily business decisions. And as you grow… the cost of each bad decision grows exponentially. What you’re able to get away with in the early days could potentially put you out of business now. We believe there’s an answer to these problems: The Integrated and Automated Agency Operating Model.
Let’s start by reviewing what Integration and Automation actually mean for an agency.
Integration means taking the tools that all the different parts of your agency need to manage your workflow and finances, making them all talk to each other work together.
Automation is simply figuring out your workflow and the actions that need to happen in the daily course of business and letting the machines do as much of the work as possible so your expensive and talented people can spend their time producing amazing work and amazing profits for your agency.
Solution: The Integrated and Automated Agency Operating Model
Let’s talk about the business impact of adopting the Integrated and Automated Agency Operating Model. We’ve conducted workflow studies and analyzed data from across the full spectrum of the agency growth lifecycle. In this example, we’ll take a look at a 50-person mid-sized agency. The concepts here will hold true, so you can scale them up or down when thinking about your situation.
For purposes of this calculation, let’s assume an average of $50,000 a year per person for salaries. Now of course the government has to get their cut; and with benefits, etc. we’re going to add a 30% burden or markup to that salary to account for those costs. That gives us an average loaded cost per full-time employee (or equivalent) of $65,000 a year.
If we look at a typical 40-hour workweek and consider vacations and holidays, we get roughly 2,000 hours per year. When we divide your total loaded cost by your average work hours per year, that gives you an hourly labor cost of $32.50 an hour for somebody using your system.
When we multiply that times our 50 employees, it means every hour that everybody in your agency is working in your systems, it’s costing you $1,625 an hour. If people are spending about a quarter of that 40-hour workweek in the system, that’s 40 hours per month.
Typically, when an agency uses multiple systems, they use a project management system, time management tool, an expense management system and some sort of accounting and financial management system. If your agency provides media planning and buying services, these costs will be substantially higher. To keep things simple, we haven’t built any of those systems into this example.
Value of Efficiency Gains
If you assume only about a very conservative 5% efficiency gain, with people spending 10 hours a week in your system, each person saves about an hour a week. By saving 5% with more efficient connected systems and reducing manual entry and hunting and gathering of data, that works out to a financial value of $3,250 by implementing an Integrated and Automated Operating Model.
How does this plug into a Business Case?
Starting in year one, you'll replace all those disconnected systems with one that’s all connected together, so those costs will go away. But of course, you need to make an investment in a new system. There should be savings because you’re not paying a bunch of different companies for multiple systems.
In year one, you’ll see a hard dollar savings of almost $6,000 after accounting for some setup costs. And from year two forward, you’ll get almost $11,000 hard cash money back in your pocket every year.
When we look at the labor cost efficiency gains that are saving everybody an hour a week and bringing that hourly labor cost down for time wasted in the systems, we’re looking at a $39,000 annual recurring financial return.
If we add your hard dollars and your efficiency gains together, this adds real financial value to your business of almost $45,000 in year one, and almost $50,000 per year in perpetuity after that.
Measured over a 3-year period, that investment that you made has given you back almost $150,000 with a 152% return, which will continue to go up the longer you measure.
That's a strong financial rationale for adopting the Integrated and Automated Agency Operating Model.
What is the Bottom Line?
Having to work in multiple systems costs you time, money and puts you at risk. There is a better way to work.
By being thoughtful and letting the computers do the work for you, you can produce better quality work, service more clients, have more fun and ultimately make more money.
The Advantage Agency Management System is the only true all-in-one solution purpose-built for agencies and creative teams of all sizes. The system covers everything from Project and Production Management, Finance and Accounting, Time and Expense Management and Media Planning and Buying.
We’ve been exclusively focused on helping our clients maximize productivity, efficiency and profitability for over 40 years, with almost a thousand agencies counting on us to help run their business every day.
With Advantage you get a team of US-based agency veterans supporting you every step of the way. All implementation and training is done by experienced Advantage staff, and all clients have unlimited access to our live customer support line from 8am-7:30pm Eastern every business day.
Find out how Advantage can help you by contacting us for a complimentary demo or discussion about your unique needs.