Technology investments can be complex and expensive, but sometimes they’re necessary to see your business grow. Measuring ROI on a software project is one of the key elements in making a decision on whether or not to proceed with development. It can help you to understand whether or not new software will help you make more revenue/profit, and if the additional revenue justifies the development costs.
Why is measuring ROI important?
ROI, or return on investment, is the percentage that an investment is projected to earn. It’s a financial measurement that can help you quantify how your company can deliver maximum output and profit. The money and time that goes into software developments mean that they can be significant investments, and so calculating ROI is one way to see if the investment will be worth it.
ROI can also:
How to measure ROI
There are two main approaches to measuring ROI, depending on what kind of software you’re looking to develop.
Software that deals with business processes
This type of software project aims to improve internal business processes and ensure that workflows are optimized.
The best way to start is by first identifying and areas where it might be possible to:
If you struggle to do so, that’s understandable as each business is unique when it comes to workflows. What can help is asking your staff what they think can increase their productivity and efficiency - what do they feel will boost their work, and by how much?
Try and calculate:
Software ROI can be measured by some or all of these factors:
Commercial software/Software as a service (SaaS)
Here, the software is your company’s main source of revenue so your ROI would be measured as the sales generated in revenue (either monthly or annual recurring revenue).
In this case, the best way to calculate your ROI would be:
Measuring software ROI
It can be a complex and difficult task to measure the ROI of technical developments, but it’s worthwhile. It can be a tool to persuade or dissuade stakeholders, figure out how best to grow your business, and guide you in the right direction to give your customers the best product or service possible.
If you’ve been looking to measure the ROI for a possible upcoming technical development, NerdCloud’s virtual team is the optimal solution. We help speed up your development process and keep you up to date the entire time. NerdCloud subscription is also more cost-effective than hiring a new developer because you’re only paying for time spent on coding, not for onboarding, coffee breaks, interruptions, meetings, etc. Get in touch with us today so that we can increase the ROI on your software project.