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ROI Calculations and the real world

In business to business sales, it is key that the sales consultant understands the full value of the Return on Investment for the purchaser.

There are beautifully designed models which clearly indicate the financial savings that will create bottom line advantage for the purchaser.

We do it too.   When selling Time and Attendance and Employee Self Service there are very clear savings, with T & A the key is better control reduces costs, and with ESS there is significant time saving .   We have done calculations on ESS that a 500 employee company can save upwards of 12 man months per year, by implementing ESS.

Terrific!   But the question is what do you do with that time.   A strong selling point for most people management solutions is that it allows the management to become more strategic, as the software solution reduces the administration overhead.   And it does, in some companies, but when it doesn't, there are reasons.

Some are:
  • A lack of forward thinking and planning
  • Ineffective change management - users, management and staff all need to be part of the process
  • Ineffective project management - this is a partnership between supplier and user that can become a blame battle, instead of a clear path towards an effective solution
  • Rather than using the extra time available more effectively, the remaining workload gets spread over longer time periods (Again, forward planning can help with this)
  • The staff were so overworked before that the change is in allowing them to go home at 5.  This, of course, can have a very positive effect on morale.
  • Failure to launch 1 - the project takes so long to get going that internal savings are expended on the implementation phase
  • Failure to launch 2 - the staff do not feel empowered during the implementation process and are not fully on board with the project, and so continue to utilise old processes with the new solution
  • The model used to calculate the ROI uses assumptions, and variations in the project are not factored into the model
  • The input data is not aligned with the purchaser's business model, and makes a decision based on incomplete information
  • And sometimes it is just the wrong solution!
While project and change management do add cost to rolling out solutions, they are worth it, if done effectively.   Then watch that ROI.....



Links and References

Accsys PeopleWare

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