Business leaders must make the best software purchasing decisions they can for the organizations they run. The right software can greatly improve operational efficiency, give you access to more capabilities, and even save you money or generate revenue.
It’s tough to easily quantify the benefits you get from a piece of software, but you’ll have to do this if you want to maximize operational efficiency or make sure you’re making the right software decisions. One of the best formulas to use is a simple return on investment (ROI) formula – but once you have this figure for a specific software platform, are there strategies that can help you increase it?
What Is Software ROI?
First, let’s establish what software ROI is and why it’s important. ROI is a measure of how much of a return you get from an investment. It’s a relative measure of value, helping you justify your purchasing and investment decisions.
In the case of software, it’s a way to demonstrate that the software is providing you more measurable value than it’s taking from you. If you spend $100 a month on a piece of software, it should bring you at least $101 in value – or else, it’s costing you money.
Obviously, the higher the ROI for a piece of software is, the more valuable that piece of software is for your business, at least generally. It, therefore, makes sense to push this figure as high as you possibly can, using the software platforms that are already in your suite.
Everything starts with estimating current ROI, so you have a baseline to compare to. Try to incorporate all costs and benefits that you can think of, including the costs of keeping the software running, and benefits like higher productivity, revenue generation, discounts or cost savings, customer retention, and even employee morale.
This figure doesn’t have to be perfect for these calculations. What’s important is that you have a consistent calculation that allows you to compare apples to apples.
How to Increase the ROI of a Piece of Software
With that in mind, how do you increase the ROI of a piece of software?
- Negotiate for a lower price. Even if you’re working with a powerful vendor, you may be able to negotiate for a lower price. This is even easier to do if you have definitive proof that the software isn’t currently justifying what you’re paying for it. If the software provides you $1,000 in value every month, but it’s costing you $1,000 as well, your vendor may be willing to offer you a discount or at least provide recommendations for how to get more value out of the platform.
- Downgrade your service tier/package. You could also downgrade your service tier or package, especially if there are a number of unused features that you don’t really need. You might be able to preserve most of the value you get while reducing what you spend.
- Tap into unused features/advantages. Another option is to tap into any unused features or advantages associated with this platform that you haven’t really tried in the past. For example, are there automation features that have been left on the table? Can you integrate this with other platforms to streamline your operations?
- Improve training and education. Employee training and education are investments. If you don’t spend enough time or money on employee training, your employees won’t be able to use your software to its fullest potential. Make sure you spend adequate time helping employees understand how your platforms work – and how they’re best used to achieve your business goals.
- Ensure consistent deployment and use. Additionally, ensure consistent deployment and use. If only half of your employees are using this platform as intended, it’s only natural that your ROI is going to suffer. Make your policies and guidelines formal, unambiguous, and accessible to all your staff members.
The Alternative Options
Not every piece of software you get for your business is going to pan out. You may find that it’s incredibly difficult to increase the ROI of a particular platform, or in some cases, you may find that the ROI is negative.
If this is the case, your best course of action is probably getting rid of the platform and replacing it with something better. With so many software options for practically any purpose under the sun, you shouldn’t have any trouble finding something that serves as a suitable replacement.
Software decisions are much easier to make when you frame them in the context of ROI. Not every piece of software in your business is going to be favorable in terms of value, but once you start thinking objectively, it will be much easier to optimize your software suite to align with your business goals.
