Part 5

ROI and financial benefits

The key metrics that decision-makers will be focused on when reviewing your proposal and business case will be the ROI and financial benefits to the business. These are likely to include:

  • The total costs of your current tool/ software or processes (a yearly figure)
  • The total cost of the software you’re proposing including items such as license fees (yearly), cost of implementation, maintenance and support
  • What is the payback period i.e. how long will it take to recoup the initial investment
  • What is the ROI for the project
  • What the savings will be in year one
  • What the savings will be over three years
  • Relevant financial benefits (e.g. reduction in insurance premiums, cost efficiencies, employee resource and productivity)
  • Relevant indirect benefits (e.g. reduce data collection errors by X%)
  • Potential reduction in liabilities associated with having a robust digital audit trail and therefore a more defensible position in the event of a claim

Step 1

Calculate direct savings from investment

To calculate direct savings, develop a list of aspects that have a financial cost that the investment will need, specifically, materials/goods and people’s time.

Show what the current and future costs and time are for each, then deduct the future cost/time from the current figure to determine the savings for each.

Example: Step 1 Calculate direct savings from investment

Step 2

Calculate indirect savings from investment

Just as in step one, develop a list of aspects that can be tracked and measured, such as improve safety incidents before they occur.

Example: Step 2 Calculate direct savings from investment

Step 3

Calculate investment cost

These costs can include implementation costs, customisation costs, training costs, and equipment purchases needed.

Step 4

Calculate the cost savings

Using the savings and costs determined in steps 1-3 use the equation right to determine the return on investment of the software.

Step 5

Calculate the ROI

Using the savings from step 4 and costs from step 3, use the equation right to determine the ROI of the software.

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