Published On: April 18th, 2016 / Last Updated: December 25th, 2021 / 2.7 min read /

Prove Your System’s Worth – Track HR Software’s ROI

When your company acquires an HR and Payroll System, the purchase and time investment is surely made with the expectation of seeing profits increase by one means or another.

Upper management that had a hand in supplying the capital and resources needed for acquisition and implementation will most likely ask for concrete evidence to show that the investment was a wise one. Actual profits and sales may or may not accurately reflect improvements, so it is important to devise a system that supplies other ways to present ROI.

Estimate Benefit Areas
When your company decided to get HR Software, chances are good that features were prioritized by expected cost and time savings. Instead of reinventing the wheel, use this prioritized list as a jumping off point for ROI tracking. Expand the list by estimating other areas in which the HR Software may save time and money, and then track those areas as well.

Go Back in Time
Not literally, although that would be great. Go back to past dates and compile reports of all of the features that you will be tracking so that you have a point of comparison when it comes time to measure progress. Go back a little ways and make sure that you have information from a few different time periods so that you can show that improvements are actually a result of the new HR Software and not just recurrent.

Calculate all HRIS Costs
In order to show that HR Software was a good investment, it is important to know how much that investment actually was. Add up all funds put towards software, paid for support, and put towards maintaining the solution. Add actual cost spent on implementation or wasted because of downtime and add this number to the HR Software cost.

Sit Back and Track
Most HR Software System make it easy to track and report things like time spent on specific tasks, so after the features that will be tracked have been specified, it is simply a waiting game. Let the system continually track the activities that you expect to improve because of the HR solution. Efficiency will generally increase as employees and managers get used to using the new system, so it is also important to show this progress.

Compare and Calculate Results
Compare the past reports and the new information to see if time or money has been saved in the expected areas. Perform calculations to determine the exact ROI to date, figuring labor cost into the equation. Don’t be discouraged if progress is slow or if results are not immediately visible, as an HR Software it is a long term investment that may take a while to pay off.

Use ROI Calculations for Future Changes
An ROI calculation should be seen as a tool to track progress, rather than as a final answer for whether or not the HRIS was a good investment. Tracking progress is sure to reveal areas that can-and should-be improved. When these areas are identified, the tracking systems that are already in place can show you the impact of changes that you make, allowing you to hone processes for ever greater efficiency and productivity.

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