Diminishing returns for more effort
You will be very familiar with the law of diminishing returns, where you get a lot of payback for your initial efforts (sometimes called ‘low hanging fruit’), then you have to work harder for smaller rewards. An example for IT professionals might be a server or application consolidation project. Hacking and Stacking produces good early $ savings, but as you go through the project, you need to work hard to get less reward.- then the ’80/20′ rule comes in to play.
Expressing as a formula
In this kind of scenario its hard to come up with a ‘finger in the air’ estimate of what the savings could be when embarking on such a project, since the savings are not going to be linear. I was looking for a simple formula that could be generally applied to such projects and came up with this.
=( SIGN(A2) * $E$1 * (SQRT(2 * (SIGN(A2) * A2 / $E$1) + 1) – 1) )
here A2 is the value to be tweaked, and E1 is the ‘aggressivity’ of the diminuation of the result. For a VB version of this and some examples and downloads, please take a look at this article.
