If you have ever spent some time in the corporate world you may have heard of the word ‘overhead’, and it is generally used to refer to the costs associated with the ‘headquarters’ staff in a large organization. See, you may be the worker on the front lines at the clients’ site, but your hourly rate goes towards your pay, the overhead, and profits for the company. Obviously, the greater the overhead expense the less flexible the company can be in setting rates and still making a decent profit. Now let’s take the concept of overhead to the network world, the two main transport protocols in use in the web are UDP and TCP/IP, one of them comes with more overhead as far as packet size is concerned. So what, why does this matter, it’s just a small bit of data right?
Consider this: What’s a stamp worth?
Let’s illustrate the fact that small inefficiencies can lead to a large cost to an organization given the frequency of the inefficient action. Imagine you are in charge of the post office and you need to identify cost savings.
Using the facts below you devise a plan that eliminates an inefficiency that exists with stamps.
- 1 Pound – 453.592 grams
- Mail pieces processed in 2010 – 171,000,000,000 
- Assume every piece of mail (packet) requires one stamp
- Stamps are printed on paper that weighs 56 g/m(sq) 
- Current stamps have the following dimensions 22.10 x 24.89 mm 
- Assume that we are using first class letters which cost $0.45 cent for the first ounce and $0.20 for each additional ounce. The post office works like airport parking garage, they charge for the full ounce (even if you’re over by .20 grams!).
Now we all know that weight affects postage prices, I mean why else would we have those cool airmail envelopes and sheets of paper with the little striped edges, right.
First let’s translate the paper weight so that we have the grams per square millimeter, since we are dealing with the metric system we know that 1m² = 1,000,000 mm², next we divide the weight by the square millimeters to get a weight per millimeter. 453.592 / 1000000 = 0.000453592 grams / sq mm.
The postage stamp is 22.10 x 24.89mm so the area is 550.069 sq mm. The weight per postage stamp is 0.249506897848 grams.
Now we can calculate the straight cost of the stamp in weight added to the letter, we know that 0.249506897848 = 0.0088010968208481997 ounces and that it costs $0.20 cents per ounce, so it costs $0.00044005484 cent to mail the stamp on your letter. Barely noticeable, right? Now let’s multiply that by 171 billion ( 171,000,000,000 ), which is the yearly mail volume; the result, we would be paying $75,249,377.64 just to cover the weight of the stamps on the envelopes. If it was this simple we could use triangular stamps and save 37million dollars!
That’s great but we know that the post office rounds up to the nearest ounce and slaps a $0.20 cent charge on those that go over. Lets test the assumption on varying percentages of letters that could theoretically be put over the ounce limit by the weight of a stamp.
1% of letters are over = 1,710,000,000 * .20 = $342,000,000
This brings me to the last point: quantifiable things matter. You may disagree and many do, however, when you start presenting solutions to problems in the work world there is only one measure that really matters and it comes down to quantifiable outcomes.
To ensure your idea makes it you have to translate these outcomes into dollars, especially when dealing with network speeds, and security issues. Why? For far too long the IT department has sat back and used the ‘security’ argument, which seems to work without any thought to cost (be it in time or money, and more often both) . Your challenge is to sit down and translate your IT related issues into dollars and cents, and come up with quantifiable savings. Remember you can save money by saving time, which is what automation strives to accomplish.