ROI is a performance measurement used to evaluate the efficiency of an investment. Software ROI is the return on investment of technology.
Worldwide, companies succumbed to inevitable digital transformation and investment into enterprise software as a direct result of Covid-19. A catalyst for growth, the average company went from, on average, 137 unique SaaS applications in 2019 (Source: Zendesk) to 288 SaaS portfolio apps in 2021 (Source: Blissfully).
Post COVID-19, business ecosystems are experiencing a complete overhaul in the way they work – both physically and digitally. So why not transform the criteria used to measure ROI in 2024?
At Lemon Learning, we believe modern solutions open doors for modern methods to calculate software ROI. Let’s discuss.
Software ROI is simply the return on investment of business applications, software, and technology. It measures user performance, software projects, workflows, automated manual processes, reporting, data analytics, and countless more variables.
A single client found that misused and unused purchasing software resulted in a calculated loss of 15 million €/year. It was attributed to a lack of training and difficulty to use software – common issues that lead to negative software ROI.
Lemon Learning client survey
ROI is a performance measurement used to evaluate the efficiency of an investment (Investopedia). In layman’s terms, the basic formula to calculate ROI is: (cost of investment) – (current value of investment) / (cost of investment)
But there are two main problems: calculating ROI is laborious, complex, and never entirely accurate, and the current value of an investment is not always known. With numerous ways to measure and interpret the impact of business software investments, we believe modern solutions require a modern approach to highlight ROI.
Whatever your position or department, you want a variety and a range of variables to prove the estimated impact of your investments.*
Let’s take a look at HR, L&D, Procurement, and IT departments. Each department uses a different software stack, producing different metrics to measure ROI.
The key is to determine what software success means to you. How can you establish the role your software applications play in meeting department KPIs, OKRs, and user needs and how do they help toward achieving company goals?
So you want to prove the worth of your cloud HRIS with relevant measurables to extend the subscription. Ask yourself the right questions.
Have your initial business HRIS KPIs been met?:
Have your personal HRIS KPIs been met?:
Training and onboarding are the first steps to ensuring positive ROI. A lack of processes or lack of quality processes will result in negative ROI thanks to:
Quantitative ROI is not always immediate, but can be measured through:
L&D departments understand that qualitative variables can provide just as much insight into software ROI and should be used to present value to the C-suite, including:
Did you know? ROI ranked last (24.2%) among L&D leaders when asked which metrics they use to determine the impact of leadership development programs.
(Source: Chief Learning Officer Magazine, State of Learning report 2020)
How can you measure the value and impact of global procurement and purchasing tools?
In quantitative measures have you experienced?:
And qualitatively speaking, have users benefited from?:
The IT department maintains and governs the entire technology infrastructure of an organization. This includes the selection of software and hardware, but also fulfilling the specific requests of their users.
How can the general performance of an organization be used to measure ROI?:
Conduct a quarterly application/software audit:
While a software audit might seem obvious, shadow IT is growing exponentially, especially in high growth businesses. In fact, experts estimate that 40% of all IT spending at a company takes place outside the IT department. Risks include:
🍋 Tip: Reduce the risks of shadow IT negatively impacting your company software ROI during your software audit, by obtaining login details and recording application owners.
General user performance can also be linked to the way users obtain support for their applications. Consider the following metrics to determine the success of your tools and how they could be improved:
Approximately $34 billion in yearly licensing waste is generated each year between the US and UK.
(Source: G2)
There’s no one concrete way to analyze your software ROI. As a product owner, manager, or software project leader, you should be searching for new and innovative methods to determine the success of your tools. Use ROI to not only ensure the future subscription and licensing of your tools, but also assist your argument for future digital transformation. Long term, negative ROI is a major indicator of the need for change.
🍋 Lemon Learning tip: If you need help determining the user performance of your software investments, consider a digital adoption platform.
Learn more about the different ways a digital adoption platform can help determine ROI; Take a look at our case studies page. Or get in touch!
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