In a previous article, I explained how many large, well-known companies have saved millions of dollars by investing in usability. But how do you apply this information to your situation? How do you convince your audience (your client, a room full of executives, your business partner, your boss, or whoever…) that switching to more usable software is actually going to save them money?
In this article, we’ll walk through making a business case for switching to more usable software. Instead of relying solely on anecdotal information, calculate how much money they could save using your company’s real data, and show them. Let’s look at how to calculate ROI in three areas:
- increased productivity
- reduced support requests
- reduced training costs.
ROI Benefit 1: Increased Productivity
There are different ways that one could calculate the value of increased productivity, but we’ll focus on one: we’ll see how reducing the time required for specific tasks can translate into money saved.
Step 1) Calculate hours saved per year on each task.
Calculate, or estimate, how much quicker the task is using the new software. Then use the following formula to calculate hours saved per year:
[ minutes saved per day ÷ 60 ] x [ # of users ] x [ days worked per yr ] = hours saved / yr
For instance, suppose the new software makes a certain task 2 minutes faster. At your company, the average user of the software performs the task 10 times per day, so they would save 20 minutes per day. There are 30 users of the software, and the average employee works 260 days per year. The calculation would look like this:
[ 20 ÷ 60 ] x [ 30] x [ 260 ] = 2600 hours saved per year
If you know how many times in a year a certain task is performed, the calculation is easy.
[ minutes saved per task ÷ 60 ] x [ task count per yr ] = hours saved per year
For instance, suppose you are calculating time savings on a task related to adding a note to a system. Last year, a total of 150,000 notes were added to the system. And if the new software makes that task 1 minute faster, then the calculation looks like this.
[ 1 ÷ 60 ] x [ 150,000 ] = 2500 hours saved per year
Step 2) Add up hours saved for all your most common tasks
We don’t need a formula here. Just repeat step 1 for each task and add up your totals.
Step 3) Use average wages to calculate cost savings
Now use your total from step 2 to show how the time saved translates into cost savings:
[ hours saved per yr ] x [ hourly wage ] = Cost savings / yr
For instance, suppose you calculated that the new software would save a total of 15,000 hours per year. The average user of the software earns $20/hour. The calculation would look like this:
[ 15,000 hrs / yr ] x [ $20 / hr ] = Savings of $300,000 per year
ROI Benefit 2: Reduced Support Requests
Similar calculations can be used to show support cost savings.
Suppose that last year, you had 2000 support requests asking for password resets. The average call took 10 minutes. The new software allows users to do it themselves, eliminating these calls. You can use the same formulas we used above:
[ 10 ÷ 60 ] x [ 2000 ] = 333 hours saved per year
You use the same formula for other issues, and calculate that the software will save a total of 1500 hours per year on reduced support requests. The average IT employee earns $80/ hour.
[ 1500 hrs / yr ] x [ $80 / hr ] = Savings of $120,000 per year
ROI Benefit 3: Lower Training Costs
Suppose that your identity management software requires that new employees receive 2 weeks (80 hours) of training. You hire about 100 new employees per year, and your trainers make $70/hr. The new software includes lots of inline help, training videos, etc, reducing the time needed for training down to two days, saving 64 hours.
[ 64 ] x [ 100 ] x [ $70 / hr ] = Savings of $448,000 per year
These calculations are based on the idea that time is money. But in real life, saved time only equals saved money if:
- you’re no longer paying for that time, or
- that time is now being used to make you more money.
Although the calculations above can produce some pretty useful figures, they don’t tell the whole story. Expect some skepticism, and be prepared to address it. For instance, if each user performs their tasks more quickly, will the company REALLY end up with more money in their pocket? How do we know the user won’t just use that extra time to get coffee or surf the net? These metrics will only work if you are prepared to explain how they can realistically translate into real dollars and cents.
For instance, are time savings substantial enough that users will actually be able to produce more of whatever it is your company produces that makes money? Will your company be able to take on more projects, or larger projects? Could staff be reduced or reallocated? Are tasks simplified enough that jobs could be delegated to employees with a lower cost?
Don’t expect to present calculations of saved time, and expect everyone to jump on board. Think it through and be prepared to explain how to actually capitalize on that saved time.
Beyond the numbers
The benefits of usable software extend far beyond the numbers produced by the formulas above. Better adoption, fewer errors, lower turn over, and a number of other factors. In addition, there are a number of soft benefits, such as increased morale and job satisfaction. The impact of these factors can be huge, but a little harder to quantify.
But money talks. So use the formulas discussed above to get their attention, and your audience may be more well prepared to hear about these important, albeit less quantifiable, benefits.
The benefits of user-friendly software might be obvious to you, but not necessarily so for everyone. So do your research, be prepared to crunch some numbers using real data, and be prepared to support your argument with case studies, such as those discussed in the previous article. If you can create a strong case, your company may well recognize what successful companies have known for decades – that investments in usability make good business sense.