The Hidden Costs of Inefficiency

When you're losing a nickel here or a dime there, it doesn't seem like a lot … until you do the math and realize it's costing you a pretty penny. Cloud platforms can be like that, too—that is, if you don't have a plan to make them talk to one another.

This may sound counterintuitive, but inefficiency can be a pretty big moneymaker—well, it is if you’re the one offering the inefficient service.

Just ask New York City’s Metropolitan Transportation Authority (MTA). Between 2000 and 2010, the city’s MetroCard system was an unexpected profit center for the city, as passengers let $500 million in prepaid fares expire, according to The New York Times. Tourists who never redeem their cards’ full value, unused amounts on lost cards, still-usable cards tossed out or shelved by New Yorkers who don’t keep a close eye on the balance—all that stuff adds up. When the cards eventually expire, their value can’t be redeemed.

In 2012 alone, this meant about $95 million for the MTA.

“Expired card value does benefit the MTA. It gets counted as fare box revenue,” MTA spokesman Kevin Ortiz told The Times.

For New Yorkers, the most annoying thing might be that some of this is a direct result of pricing inefficiencies baked into the system.

Last year, data blogger Ben Wellington pointed out a big problem in MTA’s pricing structure: The touchscreen machines that push out the cards are designed to let users pay flat rates, but the pricing structure, with fees and bonuses added, basically makes it impossible to get a zero balance when buying a MetroCard with one of the default options.

If you spend $20 on a new card, for example, the cost breaks down like so:

  • $19 goes on your card
  • a $1 fee goes to the MTA on new card charges
  • but you get $0.95 of that fee back as a bonus on your card

At a cost of $2.50 per ride, that’s enough for seven full rides on the subway. But, annoyingly, when it’s time to refill, you’ll have $2.45 left on your card—or 5 cents less than is needed for a full trip. Wellington’s solution? Choose to enter the amount manually, adding the extra nickel.

The blog post got massive amounts of attention, first leading MTA to respond, and last week, to implement changes that help solve or get around many of the inefficiencies.

“As much fun as I had seeing people in line at the subway stations typing in $19.05, I’m happy to see this positive step forward,” Wellington wrote in a follow-up post. “I’m humbled that one small blog and its readers can lead to a change that will affect a system used by millions of people every day.”

Tech’s Loose Change

So what does this fascinating transportation anecdote have to do with technology? A lot, actually.

For years, information technology has meant a lot of additional costs for organizations, when organizations end up buying more stuff than they actually need—server infrastructures, disk space, and so on.

That’s led many organizations to look closely at cloud computing as a potential way to prevent tech teams from spending more on resources than needed. But even there, you can find gaps in efficiency if your association’s cloud offerings are poorly managed—something I hinted at a month ago with a lengthy anecdote involving House of Cards.

But these issues may show themselves in other ways—the “two seconds here, a minute there” losses in productivity that happen when staffers are forced to work around limitations of frustrating software or when incompatibilities with outside systems create additional time sucks.

And that’s why it matters whether these systems can talk to one another—that they have application programming interfaces (APIs) and there’s an understanding that each is merely a part of a larger universe, rather than the whole universe itself.

Keep ‘Em Connected

The latest edition of SkyHigh’s Cloud Adoption and Risk Report, being released this week, speaks to these issues. It notes that companies, on average, connect with 1,555 different business partners through cloud computing resources, and it points out that companies using tools that are easy to plug in no matter the context are able to take advantage of the efficiency gains the cloud can create.

“These connections are helping companies reduce inventories with just-in-time manufacturing, bring innovative products to market faster, and deliver better customer service,” the report states. “The high tech and manufacturing verticals are the most prolific when it comes to connecting with partners via the cloud, followed by healthcare, media and entertainment, and financial services.”

A good example of this surfaced just last week. Facebook, in its effort to take over the world in a whole new way, announced updates to its Messenger platform that make it perfect for use as a customer service tool. However, if Facebook forced companies to serve Facebook users through a Facebook chat interface, this would gum up the works and lead to lost time. But rather than doing that, Facebook did something smart—it teamed with an existing high-profile customer service tool, ZenDesk, to help power the machine. The result: When a customer is complaining about his expired bottle of ranch dressing to Target, they see a chat interface—but Target’s customer service rep sees things through the company’s well-oiled customer service machine.

ZenDesk shows up prominently in SkyHigh’s cloud study—it’s seen as something the cloud firm calls a “hyperconnector,” in that its product is particularly effective at plugging into other tools, and, as a result, it’s effective at leveraging the needs of a whole network of vendors.

These tools create connective tissue from which you can build your productivity suite. Other companies on SkyHigh’s hyperconnector list include players like SalesForce, Office 365, Slack, and Box.

If you’re building an infrastructure based on Software as a Service (SaaS) tools, you want at least one of these—maybe even a few.

Efficiency Through Connectivity

Ultimately, the office environment offers a microcosm of the issue that passengers on the New York subway system ran into—we’re always wasting lots of resources in small ways.

But as associations are organized bodies, they have an advantage over individual commuters: There’s room to control the system, to weed out the inefficiencies, to get back the nickels and dimes of lost productivity by figuring out how to get our numerous tools to work together.

In the long run, IT pros need to ensure that its association management system (AMS) can talk to its content management system (CMS) and so on. That every vendor has an API to offer its users—as well as documentation to easily connect it. That their associations find ways to lose the big, inefficient pieces and instead replace them with smaller, more organized pieces—but pieces that can talk to one another.

All those nickels and dimes can add up, but they don’t have to.


Ernie Smith

By Ernie Smith

Ernie Smith is a former senior editor for Associations Now. MORE

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