Software upgrades and innovations need to offer real value to the company, in other words, a return on investment (ROI). If you’re going to spend money on a new business solution, you have to prove how the benefits it provides outweigh the costs. Whether you’re making a case for new workflow software or justifying past expenses, here’s some advice on how to calculate ROI and prove that your technology upgrade is delivering on its promises.
Return on Investment (ROI) is a financial performance metric that evaluates the profitability of an investment by comparing the amount of money generated or saved to the amount spent. It’s calculated by dividing the net gain or loss by the total cost of the investment and expressing it as a percentage.
For example, if you were to invest $10,000 in a new workflow software and realize a net gain of $20,000, the ROI would be (20,000-10,000)/10,000 x 100% = 100%.
Measuring ROI over a period of time is vital for businesses. It provides insight into the effectiveness of their investments, such as whether they are generating enough revenue or savings to justify the initial cost. This is especially important for workflow software as it can have a significant impact on a company’s efficiency, productivity, and profitability. By measuring the ROI of their workflow software, companies can determine whether they need to optimize their processes or invest in different tools to achieve better results.
Failing to measure ROI can have significant consequences for your business. Without these insights, you won’t have a full-picture of how your software is affecting your operations and an ultimately justification of its cost. Here are a few challenges you may face if you don’t measure ROI:
Limited Insight: ROI represents a range of metrics that help you better understand how to use your workflow software within your business. When you don’t measure these metrics, you’ll be missing out on valuable insights into how to improve your use of the software over time.
Poor Resource Allocation: One of the key benefits of workflow software is improved productivity and efficiency. But if you aren’t measuring ROI, you won’t be able to see which processes are generating the most value. This can lead to poor resource allocation, focusing on less productive tasks rather than those with higher ROI.
Missed Opportunities: Failing to measure ROI means missing opportunities to optimize your workflow software and maximize its value. By identifying areas with highest ROI, you can concentrate efforts that drive even greater gains.
Measuring ROI is critical for extracting the most value from your workflow software. Without these metrics, you may overlook opportunities to improve your processes and fail to realize the full benefits of the software.
Exact ROI calculations can depend on what metrics matter most to your company and its decision-makers, as well as the ability to estimate value that isn’t easily quantifiable. Here are some some key metrics we do suggest measuring, and how to monitor them:
Process Efficiency: Workflow software streamlines and automates manual processes, leading to greater efficiency. Measure process efficiency by tracking the time taken to complete a task or process before and after implementing the workflow software.
Consider a retail company that manually handles inventory management, spending an average of three hours per day reconciling inventory records, updating stock levels, and generating reports. After integrating a workflow software, these tasks become automated, reducing completion time to just 30 minutes. Measuring the time taken to complete these tasks allows the company to assess the improved process efficiency of the workflow software.
Employee Productivity: Workflow software enhances employee productivity by reducing time spent on administrative tasks. Measure employee productivity by tracking the number of tasks completed by each team member before and after implementing the software.
If the retail company’s team used to complete an average of 10 tasks per week but can now complete 15 with the help of the software, you’ve achieved a significant gain in productivity.
Error Reduction: Workflow software significantly reduces the likelihood of human error, which can be costly and time-consuming to fix. To measure error reduction, track the number of errors that occur during a set period of time (such as a week or a month).
Following our retail company, before workflow software, the company experienced an average of 10-inventory related errors per week, including incorrect stock counts, misplaced items, and data entry mistakes. After integrating workflow software, these automated processes reduced the errors to an average of one per week. This not only saves valuable time spent on error rectification, but mitigates the potential losses associated with incorrect inventory management.
By tracking these metrics as a key baseline, you can gain a clear picture of the ROI you’re receiving from your workflow software and identify areas for further improvement.
Now that you’ve measured your ROI, you can leverage those insights to optimize your workflow software and processes. ROI metrics provide valuable information to enhance your software and streamline processes. Here are some tips on how to use ROI insights for optimization.
Identify Areas for Improvement: The first step is to identify areas in need of improvement. Utilizing ROI metrics will help determine which aspects of your software are not performing well. For example, if you find that your team is dedicating a significant amount of time to a specific manual task, you can explore ways to automate some of these processes, streamlining the task and enabling your team to work more efficiently.
Make Data-Driven Decisions: Instead of relying on guesswork, ROI metrics provide a data-driven approach to determine the optimal course of action. For example, if you discover that specific workflows are falling short of delivering the anticipated ROI, you can proactively make adjustments to enhance their efficiency.
Continue Monitoring: ROI insights should not be a one-time assessment. Continuously monitor the performance of your software and adjust your processes as needed. Regularly review the ROI metrics to track progress, identify new areas for improvement, and adapt your strategies accordingly. Optimization is an ongoing process that requires constant evaluation and adjustment to maximize its benefits.
Workflow automation software is a real game-changer for organizations that aren’t using technology to improve day-to-day operations. But it’s essential to understand the return on investment (ROI) that this technology can provide. By automating repetitive tasks and simplifying complex processes, workflow automation can save valuable time and improve accuracy. These benefits translate into cost savings, increased productivity, and a more efficient use of resources.
To learn more about how to measure the ROI of workflow automation software and ensure that you’re getting the best value for your business, download our workflow automation e-book today. With insights and guidance from experts in the field, you can confidently invest in the right software solution for your company.