Future Proof update March 09 – Using ROI metrics to justify digital recordkeeping project spending March 23, 2009

Most digital recordkeeping improvement projects require an investment of funds and time and often involve a certain degree of upheaval in the way your organisation does its business. How can you make the case for change so that management are willing to support your proposal?

One method that makes a lot of sense to managers is to predict a return on the investment (ROI) using real examples. A business case with strong ROI indicators will stand out from other projects that may be considered for funding.

Calculating the return on investment (ROI) is about proving that an investment will bring rewards, usually best described in monetary terms – either earnings or savings.

For a given cost saving idea you can calculate the ROI by looking at:

  • Time saved (hrs per month) – This is the time savings you can achieve each month by putting your cost saving idea in to effect. Don’t forget to compute saved hours for all people whose time you actually save!
  • Labour rate ($ per hour) – The labour cost of the person/s whose time you’re saving. If you will save time for most staff in the organisation an average salary can be used..
  • Annual savings – This is the time savings of your idea multiplied by the labour rate and adjusted for an entire year.
  • Costs – This is the total cost of implementing your idea. Don’t forget software, hardware, warrantees, training time, subscriptions, etc, when you compute the total cost.
  • ROI (%) – Savings divided by costs displayed as a percentage. The higher the number the better.
  • Payback (years) – The number of years it will take for your idea to pay for itself. The lower the number the better. [1]

Some examples of cost saving arguments for digital recordkeeping that could be put into the ROI framework described above include:

  • time saved by individual staff as a result of being able to save documents electronically rather than the print and file method
  • time saved by the FOI officer searching for records, or
  • time saved by project officers on compiling reports as a result of reusing previous information.

[1] Green, R, A sample ROI worksheet for computing purchasing scenarios, CadManager 2009, Viewed 19 March 2009 <http://www.cad-manager.com/tools>

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