Measuring ROI of Management Software
Knowing the real cost of business management software and measuring ROI is important! However, knowing the life-changing benefits of good management software is more important.
Direct-cost, compared to cost-saving benefits, are the statistics needed for measuring ROI (Return on Investment) of Management Software. To be sure, measuring ROI is challenging, if you don’t have a way to measure it, or you don’t know how or what to measure.
Please note, certain benefits derived by using management software are immeasurable, i.e. a peaceful business culture.
How Management Software Returns Investment
1. Use and Reach of Management Software
The higher the use and the more people impacted via the management solution, the higher the ROI. That being the case, having tools within the business application itself, which hold users accountable for poor use of the software, assures higher return.
2. Error Reduction via Management Software
The greater the potential of management software to reduce errors and miscommunications, the greater the possibility of return! Therefore, acquiring BPM software that includes Quality Management and Service Control gives a greater return.
3. Teamwork via Management Software
The better the capability of an application to support teamwork, the better the ROI! Therefore, having tools within the management software to reduce miscommunications, the higher the ROI. For instance, Operations Manual (SOP), Document Management, HR Systems and many more.
4. Information Distribution
Moreover, the better the business management system distributes information, the greater the return on investment. In other words, giving all members of the organization easy access to reliable information to perform their job more efficiently, the greater the ROI.
How Measuring ROI of Management Software Works
Start measuring ROI by considering the cost of current activities that cause frustration and waste in the business.
For example, when a mistake occurs on a job, project or service, quickly do a rough estimate of the time and money lost. More importantly, record the estimates for a minimum of one month.
At the end of the month, simply add up the cost of waste from the errors on all jobs and/or services. At that point, be ready for a surprise!
Cost Versus Investment of Management Software
Simply calculate the average monthly cost of the Management Software, including training and set-up. Next, compare the cost of errors and miscommunications discussed earlier.
If you are vigilant in your assessment, you will easily see that management software shouldn’t cost money when applying its tools to fix all waste; it should make money. In fact, the ROI happens quickly; and soon, more profits flow by continuous use of the BPM software.
Management Software Pitfall
Over the years, speaking with countless business owners, we have found a major pitfall for small business owners to be aware of, when acquiring Management Software.
Many small business owners influenced by software “bells & whistles” are like moths to a flame, hoping for quick fixes to solve problems in their business.
In other words, charmed by fast-talking salespeople promoting their latest shiny software features, business owners will buy without considering their real needs. Sadly, many of these shiny features will have little impact on the bottom-line or solving real issues for the small business owner.
Sadly, vendors of business process management software often bypass the real issues that plague most small businesses. For this reason, we promote time-tested features found in the best management software. As a result, business owners have access to tools for eliminating all types of waste.
In short, waste from chaos is the real enemy of small business!
In fact, we’ve seen that just one error averted, using our BPM software, pays for several years of the software’s cost.
Now that’s an ROI. In short, that’s an investment any small business can afford.
Did I mention? Great systems work and make money!
Philip Beyer, founder/president of Ebiz Products LLC and founder of Beyer Printing Inc. in Nashville Tenn., is a chronic entrepreneur, business systems analyst and consultant. Author of "System Busters: How to Stop Them in Your Business" and recipient of an InterTech Technology Award for the design and development of System100 business process management software. Beyer speaks to business owners across the country on how to bring lean, sustainable order to their businesses. Contact him at (615) 425-2652.