Nothing speaks louder than dollars, especially when you’re trying to convince your C-suite that about the need for new software. Give them a great starting point by calculating the estimated return on investment.
ROI 101
Simply put, ROI is the ratio of money gained or lost on an investment relative to the amount of money invested. This involves calculating the cost of the way things are done today, estimating the cost savings and revenue generating benefits of doing things using the new solution, calculating the difference, then dividing that by the cost of the purchase. Typically, you would do the calculations for each year over a three-year period.
ROI steps at a glance
Step 1: Calculate the costs of your current performance management process
An easy way to get this info is to poll a representative number of employees and managers and ask them to estimate how much time they spend preparing and conducting a single employee performance appraisal in a given year. When you get your answers back, figure out the average time spent by managers and the average time spent by employees.
Step 2: Estimate what a new talent management system would cost. The typical cost includes: the cost of the licenses, hosting costs, whether you host the application or the vendor does, initial implementation and training costs any maintenance or consulting costs that you may incur each year.
Step 3: Calculate your ROI and impress your CIO…
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