Workflows are designed to improve productivity, but measuring productivity can be difficult. Productivity is essentially intangible, and in some ways, subjective.
Employees or teams may feel more productive, but is that enough? Are methods and tools used to improve productivity actually having real impact on the organization’s bottom line?
When it comes to workflow, gauging efficiency and measuring ROI is essential. You need to know whether or not your chosen strategy is impacting your organization in tangible ways. But where do you begin?
Here are a few important things to know about measuring ROI effectively.
The Importance of Measuring ROI
Understanding a workflow’s ROI is important to demonstrating its real value to the organization. Because workflows are essential to core business processes, you need to know whether or not a workflow is accomplishing its designed purpose.
On a basic level, measuring workflow ROI will let you know how your business is performing as a whole. You can see which processes are efficiently producing results and which are unnecessary. In turn, this allows you to be better informed when adding, changing or removing business processes from your organization.
ROI metrics can also indicate the value of your technology. If you are automating your workflows, for instance, you want to know whether your automation software, tools or services is saving enough time and money to justify the costs of implementing and maintaining them.
You may also want to be able to compare the cost savings between various tools when you’re selecting them. The only way to answer these questions is by measuring ROI.
What does that look like exactly?
A formula for measuring ROI might look something like this:
- Time (spent on a single task) x Frequency (of performing tasks per month) x Cost (per hour) x 12 Months = Yearly ROI
These metrics would allow you to assign a monetary value to your workflows that you may not see otherwise. But it’s important to remember that not all ROI can be measured in money.Not all ROI can be measured in money. Click To Tweet
Measuring Hard vs. Soft ROI
There are actually two main ways to measure workflow ROI: hard and soft.
Hard ROI refers to measurements relating to cost or time savings, and is often the easiest ROI to calculate (like the formula above). Hard ROI might measure things like:
- Time savings per task
- Process cost savings
- Time spent on scheduling or documentation vs. resulting time saved
- Savings on operational and storage costs
- Time spent correcting errors
- Labor costs and productivity gains
Soft ROI, on the other hand, refers to general efficiency gains or employee/customer satisfaction and can be more difficult to quantify. Soft ROI metrics might include:
- Increased employee productivity
- Improved company morale
- Positive company culture and employee wellbeing
- Improved brand reputation and perception
- Decrease in completion times
- Improvements in team collaboration
- Reduction in the number of lost documents
- Increase in remote employee efficiency
- Decrease in the number of bottlenecks
Both hard and soft workflow ROI can be reflected in the success of your business processes over time. Though soft measurements may take more time to see an obvious return, they will show you how your overall processes improve (or harm) your employee and customer relationships.
How to Calculate Workflow ROI
So how do you begin the process of calculating a workflow’s ROI? Because soft ROI takes longer to assess, you will most likely want to begin by measuring hard metrics.
Calculating Hard ROI
Begin by calculating the total amount of time involved in each task in your workflow. Record the number of tasks that take:
- 0-30 minutes
- 30-60 minutes
- Over an hour
Then, using our hard ROI formula, you would calculate the average time of each task against the frequency and the cost per hour, giving you the net cost of your workflow in dollars.
As an example, one case study attempted to measure the cost of a single manual email sent as a part of their workflow. They took into account composition time, follow-up time, and reading time to come up with the following metrics:
- Composition time = 2 minutes
- Follow-up time = 0.5 minutes (half of emails sent require a one-minute follow up)
- Reading time = 0.5 minutes (15 seconds more than for personal email, read twice)
Adding these together, each manually sent email was shown to cost roughly three minutes of employee time. They then calculated total costs to the organization.
- Time spent per email = 3 minutes = 0.05 hours
- Number of notifications = 5 per employee per day
- Case worker employee cost = €50 per hour
- Number of caseworkers using workflow system = 100
By using the hard ROI formula (0.05 hours × 5 per day × 20 days per month × €50 per hour × 100 caseworkers), they determined the total cost of a manually sent email was roughly €25,000 per month.
Cutting that time through automation, even by an extra minute, would save thousands of dollars a year. This is one example of why measuring hard ROI is important for workflow processes. Measuring can save you a lot.
(If you want to measure the hard ROI of your workflow tasks, Aheyu has an ROI calculator here.)
Calculating Soft ROI
Measuring the soft ROI of your workflow will be much harder. Unfortunately, there’s no formula for calculating improvements to morale or customer satisfaction. There are a few things you can do, however, to gauge whether or not your workflow is improving your overall processes.
One way to assess the soft benefits of a training program is consider it in the context of the achievement of specific, quantifiable goals. A company considering implementing a new workflow, for instance, may have specific goals that the workflow should accomplish.
Tracking the accomplishment of that goal along with the time it took to achieve may help you determine whether or not the workflow was effective from a soft ROI perspective.
To measure increased employee commitment to a new workflow or process, you can also interview or create surveys for employees to fill out that may help you gauge productivity levels and overall satisfaction.
Measuring the ROI of your workflow is incredibly important to the success of your business processes (and your organization), but it’s important to remember that not all ROI will be easily measurable.
Most processes and workflows will have some form of hard ROI, which, in most cases, can be determined by a formula or ROI calculator. You want to look at time-consuming tasks as a part of your workflow to maximize these measurements.
But you also want to track soft ROI, which may take more time and effort. To capture soft ROI measures into your analysis, commit to conducting research that provides insights on the wellbeing of your team and customers. These insights should then be examined and considered alongside hard ROI results.