Measure your ROI on your Software Tools
Measure your ROI on your Software Tools
Let’s talk about money and software
You wouldn’t hire an extra person to have them sit in the corner and do nothing. But software is often different.
It is hidden. It resides invisibly on a computer peeking out only with an icon on a desktop or favourites bar.
People forget they have it. Maybe because they have found something better to use or they have gone back to the “old and familiar way” of doing something.
It may make a bold appearance but still be partially hiding in the corner. This happens when some of the features are actively utilised but not all of them.
It may become obsolete and to stay up with your competitors offering updates may be required.
Whatever the situation, you want to make sure that you are not wasting money by having tools or partial tools in your business that are not paying their way.
There are a few aspects to the Return On Investment calculation that should be considered.
How much time the software saves
Often this can be calculated and shown as an actual $ figure. An Agency in our network recently installed some Artificial Intelligence software that triaged incoming calls before directing them to a person. Many issues were answered by the software /client interaction. In the first couple of weeks the reporting showed that a certain number of calls were answered. We could calculate approximately how many minutes it would have taken on average to manage that many calls (200 minutes total) and apply the hourly salary rate of the person who would have been doing that task. Say $40 per hour x 200 minutes = $ 133.33 in contribution towards the software cost that was recovered over that period ( provided the team member could be gainfully deployed onto other tasks).
What % of the software capability is being used
There are two ways of looking at this;
If the software was purchased to solve a specific issue and it does so well, then all the other features it may have were not the key reason for the purchase. They may therefore be considered as a bonus. The purchase cost/benefit was worth it just on the basis of solving the driving issue.
If the extra features do offer a benefit to your business but are simply not being used then there is a reduction on the possible return on investment. This is very hard to measure if they are not direct time saving functions but a simple way to look at them is to consider the effort (cost) it would take for someone in your organisation to learn the features and appl them. If the person is available and the cost is small – just do it.
Some things have an intrinsic value
There are elements in commerce that have value that is hard to turn into a numerical dollar amount but it is certain that there is value.
For example, software that gives better communication with your customers. It may allow them to see the status of their account, or the progress of a job, or real time feedback. Undoubtedly this is a benefit to those who use the service. It is hard to quantify and inventing a method would in most cases be convoluted and involve wild assumptions. The best view of these opportunities is to accept that they have MORE value if MORE people experience them. So actively encourage, support, train, monitor your customers so as many as possible get the benefit and love your company more for it.
Treat the set-up time as a “sunk cost”
If you have done your Software Selection process correctly the best option to purchase would have been revealed. In most cases similar software will take similar effort to install and get operational. Barring any major issues that may not have happened with an alternative software supplier ( eg. Records being uploaded twice in the changeover process), the path to utilisation may not be materially different.
Once the energy and time is put into getting the software operational it is gone, gone forever.
Unless there is a big difference in set up it is wise to not dwell on this cost and focus on getting the best from what you have over the life of the software. Squeeze the lemon harder to get all the benefits it has to offer.
In fact, that mindset is the overriding concept to take away from this article. “Are you getting all you can from your software systems on an ongoing basis?” If not, find the people who can extract the value, train them and get the use from what you are paying for. By definition this must give you a better Return on Investment for what you are spending on your software.
