How to measure the ROI of efficiency software
Most people assume that software-based productivity solutions will provide a number of benefits for companies, but assumptions rarely convince decision makers. Instead, it is important to provide a framework for measuring the return on investment (ROI) of any new initiative. Even the intangible benefits of efficiency software can be quantified for an ROI calculation.
Calculating return on investment
The ROI of efficiency software can be measured by analysing a number of costs and benefits.
The profitability of a new initiative isn’t just a number pulled from thin air. It can be measured by analysing a number of costs and benefits.
One of the most common methods of measuring ROI is by taking the projected gain of a new project – the anticipated value minus the cost – and dividing it by that cost. Converting that result into a percentage can provide an idea of the initiative’s profitability.
Take, for example, a company considering migrating to the cloud. The project manager figures this will cost $800 but result in $1,000 in savings. The projected financial gain is $200. Dividing that by the project’s $800 price tag results in 0.25, a 25 per cent ROI.
Special considerations for efficiency software
When looking at hard numbers, calculating a projected ROI is relatively easy. Running this calculation for an efficiency software implementation will require assigning tangible value to seemingly intangible improvements.
Time is money, and the main goal of efficiency software is saving a company both. The projected gain of efficiency software can be determined by estimating the amount of time spent on a task before and after a move to new software.
Let’s look at payroll, a rather complicated system that’s dependant on company structure. With legacy technologies, payroll can take a long time as full-time, part-time and contract employees may be on different pay cycles. Payroll software with online time sheets manages these cycles and can get everything sorted in significantly less time than before.
Employees’ time is valuable, and reducing the amount of time it takes to complete a task saves money. Knowing how much that time is worth makes it easy to assign a dollar value to the time saved through new software implementation.
Efficiency software like FastTrack360 streamlines a number of processes across all areas of business, saving time and money with recruiting, billing and paying. By managing all these tasks through a comprehensive platform, companies can drastically reduce their process time and see a substantial increase in productivity.