Justifying the ₱250,000.00 Payment for Business Process Automation Upgrade

 Case Scenario 2:

The same university faced a complex problem because its automation systems are nearing the end of life due to the risk of component failure and, subsequently, downtime, causing an inability to upgrade its business processes since the exit of its top computer programmer  who was hired only as a contractual employee and was not happy with this salary.

After that, many problems happened related to its business processes and its clientele was unhappy with the situation.

To solve this problem, several committees have been formed without results. So, the university decided to outsource the computer programmer himself who had been able to solve the problem, within ten days.

After that, he submitted an invoice for upgrading their business process automation for 

₱ 300,000.00, and when asked about the exact amount used to accomplish the works in ten days, it was ₱ 50,000.00.

Do you have any justification for ₱ 250,000.00?

It is important to note that automation systems are now essential to the efficient operation of modern organizations since they increase productivity and optimize performance (Cameron, n.d.). Universities, in particular, depend on these systems to handle important tasks like managing student records, processing admissions, and communicating with students and staff. When these systems fail or become outdated, it can cause major disruptions. This case study focuses on a university that encountered such issues after its top computer programmer left due to dissatisfaction with his salary. Hired on a contract, he was responsible for maintaining and upgrading the university’s systems. However, once he left, the university struggled with automation failures, leading to unhappy clients and a decline in operational efficiency. Despite forming several committees, no solution was found. Eventually, the university had to hire back the same programmer  by outsourcing him to fix the problems.

Within 10 days, the programmer successfully upgraded the systems and submitted an invoice for ₱300,000, with ₱50,000 used for materials and ₱250,000 for his services. The key question here is whether the ₱250,000 fee is justified, and this case study will justify it by focusing on the value of expertise, cost savings, and effective knowledge management.

Expertise and Efficiency

One of the most important factors in justifying the ₱250,000 payment is the programmer’s level of expertise and efficiency. Fixing a complex system like a university’s automation process in just 10 days shows a rare skill set. The programmer not only understood the specific problems but also quickly implemented solutions that worked seamlessly. His deep knowledge of the system, gained from working with it previously, allowed him to diagnose and address issues faster than any new hire or committee could have.

This efficiency is valuable because it saves the university from prolonged downtime. Hiring a less experienced person might have taken weeks or months to solve the same problem, which would have led to further operational delays and increased costs. The programmer’s quick work helped the university avoid these problems, and his ability to solve complex issues in such a short time makes the ₱250,000 payment reasonable.

Cost Savings

While the direct cost of materials was ₱50,000, the real value lies in the programmer’s expertise and the time he saved the university. The university might have suffered large financial losses if the system had kept failing.Automation malfunctions can impact daily communications, financial transactions, and student admissions. These issues can cause delays and inefficiencies that are expensive to fix. The university may have needed to hire multiple consultants or form more committees, further increasing expenses without guaranteeing a solution.

The ₱250,000 covers the cost of preventing these long-term issues. Instead of facing higher costs from prolonged problems, the university benefited from a rapid, effective fix. This is an important point: paying for expertise upfront often prevents far bigger expenses later on. As noted by knowledge management experts, retaining skilled professionals can save organizations time and money in the long run (Adamska, 2023). In this case, the programmer’s fee is justified because it represents an investment in preventing bigger problems.

Avoidance of Downtime

The risk of system failures and downtime was a major concern for the university since this will greatly affect the transactions within the university. When systems that handle core business processes fail, it affects all aspects of an organization. In this case, the university’s automation systems were nearing the end of their lifecycle, meaning they were prone to breaking down. Prolonged downtime would have led to operational paralysis, dissatisfied clients, and potential reputational damage which will only cost the university more money.

The programmer’s quick intervention with the use of his past experience with the system and the use of his skills, he was able to prevent these risks. By upgrading the system in just 10 days, which may usually need 1 to 6 months to fix depending on the problem, he ensured that the university could continue its operations without facing serious disruptions. The cost of this downtime could have been much higher than the ₱250,000 paid to the programmer. It’s important to remember that preventing losses is often more valuable than repairing damage after it happens. The programmer’s fee reflects the value of avoiding these potential losses, making it a sound investment for the university.

Quality of Work

Another reason the ₱250,000 fee is justified is the quality of work delivered. The programmer did not just patch up the system temporarily; he upgraded it to ensure long-term stability and performance. This means the university is now operating on a more robust, reliable system that is less likely to fail in the future. The quality of these upgrades will reduce the need for ongoing maintenance and repairs, saving the university money over time.

The work done by the programmer also enhanced the business processes of the university. By automating more effectively, the university can now handle its operations more efficiently, leading to better client satisfaction and smoother internal workflows. The long-term benefits of these improvements, such as fewer system failures and less need for manual intervention, justify the programmer’s fee.

Market Rates for Expertise

The fee of ₱250,000 is also in line with market rates for highly skilled professionals who provide specialized services (U.S. Department of Labor, 2024). In today’s job market, consultants and experts who have the ability to solve complex problems under tight deadlines command higher fees. This is because of their skills and experience, and their work often requires a deep understanding of the systems they are tasked with fixing.

The university’s failure to recognize the value of this programmer when he was first employed led to them losing a key asset. When they outsourced him back to solve the problem, they had to pay the higher rate that reflects his expertise and the urgency of the situation. High-level consultants, especially those working under time constraints, often charge premium rates because the work they do can have a critical impact on an organization’s success (Weiss, 2021).

Long-Term Benefits

Finally, the upgrades made by the programmer will bring long-term benefits to the university. The improved automation systems will likely lead to more efficient operations, better client satisfaction, and fewer issues in the future. These benefits translate into financial gains for the university as it will spend less time and money on maintenance, and the improved processes will make it more competitive.

The ₱250,000 payment is not just for the work done in 10 days but also for the lasting impact of those improvements. The university now has a more reliable system in place, which will prevent future problems and help them grow more efficiently. The long-term savings and benefits far outweigh the cost of the initial payment. This demonstrates the value of investing in quality work upfront to avoid larger expenses later on.

Knowledge Management and Retaining Expertise

One key lesson from this case is the importance of knowledge management (KM). When the programmer left, the university lost not just an employee but also the critical knowledge he had about their systems. This knowledge gap left them vulnerable, as no one else could fix the automation issues after he left. According to KM theory, organizations must manage their intellectual capital effectively by capturing, retaining, and sharing knowledge among employees (Starmind, 2023).

If the university had retained the programmer or had a system in place to transfer his knowledge to others, they could have avoided these problems. By outsourcing him at a much higher cost, the university had to pay for the knowledge they initially undervalued. This case highlights the dangers of failing to manage knowledge effectively and the financial costs that can arise as a result.

Conclusion

The ₱250,000 payment for the programmer’s services is justified based on several factors: his expertise, the efficiency with which he solved the problem, the avoidance of prolonged downtime, the high quality of the upgrades, alignment with market rates, and the long-term benefits to the university. By quickly resolving complex automation issues, the programmer helped the university avoid even greater financial losses and operational disruptions. Additionally, this case demonstrates the importance of knowledge management, as the university’s failure to retain critical knowledge led to higher costs in the long run. In conclusion, the payment represents a fair compensation for the value delivered and the long-term gains for the university.

References

Adamska, I. (2023, May 15). Strategies to minimize knowledge loss in organizations. NSFLOW. https://nsflow.com/blog/strategies-to-minimize-knowledge-loss-in-organizations

Cameron, P. (n.d.). Benefits of Automation in Business. Fortra. Retrieved October 11, 2024, from https://www.fortra.com/resources/guides/automation-advantages-5-benefits-automation

Starmind. (2023, April 5). What is knowledge management and why is it so important? Starmind. https://www.starmind.ai/blog/what-is-knowledge-management-and-why-is-it-so-important

U.S. Department of Labor. (2024, August 29). Computer Programmers : Occupational Outlook Handbook: : U.S. Bureau of Labor Statistics. Retrieved October 11, 2024, from https://www.bls.gov/ooh/computer-and-information-technology/computer-programmers.htm 

Weiss, A. (2021, November). Value-Based Fees: How to Charge What You're Worth and Get What You Charge, 3rd Edition. Wiley. https://www.wiley.com/en-ie/Value-Based+Fees%3A+How+to+Charge+What+You're+Worth+and+Get+What+You+Charge%2C+3rd+Edition-p-9781119776925