Technology is only useful if you get a return on your investment in staff time, fewer vital employees, less money spent, or more sales. Some of these – particularly staff time in relation to how much the product or subscription costs – can be difficult to quantify. That’s what we are here to discuss today.
What’s the ROI?
When it comes to producing a new product or selling a new service, ROI is easy to discover. You have sales statistics, costs of production, and employee salary information at your fingertips. But how does this work when you’ve purchased or signed up for a new piece of technology? How do you calculate the ROI?
Here are a series of questions you can ask to determine the return on investment:
- How much time/money does this piece of technology have to save to be worth it?
- How many additional sales does it have to enable?
- How many staff does this automation need to replace to justify the cost?
- How much did this technology cost?
- How long am I willing to wait for the tech to pay for itself?
Here’s an example:
Let’s say you are paying $27/month for Quickbooks. Your accounting team spent 40 hours at $50/hour to set it up. You also spent $500 on a training class for the team and paid them to attend 20 hours of classes. That means your monthly $27 purchase actually costs $3,824 for the year.
If you are willing to wait a year for Quickbooks to pay for itself, then it needs to save your accounting team $319/month in employee time and/or money to pay for itself. If it succeeds in saving you that $319/month, you will begin to see ROI in 12 months.
One simple way to calculate if you are getting your money’s worth when it comes to tech tools purchased is to get your employees to track how long they spend on various projects. This can be done with free tech tools like Toggl or calendaring apps. In the case of Quickbooks, if your accountants can spend more time on collections or purchasing and less time on searching for invoices, correcting mistakes, generating reports, and basic accounting duties then your Quickbooks purchase was a good choice.
How to get the most out of tech tools
One of the most common problems many companies face when purchasing new technology is buying tools that don’t get used to their fullest extent. This is usually because:
Employees are so busy working they don’t have time to train up on the new tools.
No one told the employees using the technology that there was more to learn.
Staff training isn’t considered important.
People are often lax when it comes to technology, relying on intuition instead of documentation, webinars, classes, and other training methodology. This is a mistake. Although your newly purchased tech isn’t a forklift or some tool out in the real world that could damage someone if not understood – it is still something your company is spending money on, and it needs to be understood.
Even though it takes time at the beginning of the purchase, it is essential to get your staff fully trained on any tool they are using – even if it’s technology. By fully trained we mean that they should read up on how to use it, take classes, attend webinars, and have discussions with other employees using the same tech to make sure there is nothing they missed. We do not mean giving them an hour or two to play around with it before they get back to work.
It is vital to get the most out of any tool you purchase, whether that tool is on your factory floor or lives inside a computer. Find out more about our strategies for getting your company organized and optimized. Contact us today for a free evaluation!