ROI is one of the most popular metrics that can be used to measure the financial attractiveness of a business investment, but calculating an accurate figure is not easy. Yet, when it comes to scheduling applications, the return is quite clear, as they help businesses get more done in less time and with fewer resources. From simple room booking to facility management, the result is a more productive business environment creating more time to devote to important business activities.
There are many different techniques that can be used to measure the financial attractiveness of a business investment. You can apply these techniques to any investment project, such as equipment acquisition, facilities improvements, office expansion, or software purchase. Business investments must meet a certain minimum return in order for the project to be approved. Although the financial modelling tools are well-accepted standards, each company or organization sets their own minimum return requirements. Common financial evaluation tools include Net Present Value (NPV), Payback Period, Internal Rate of Return (IRR), Return on Assets (ROA) and Return on Investment (ROI).
ROI is one of the most popular metrics used when comparing the attractiveness of one investment with another. The return is the total amount of money expected to be gained from investing in the project and the investment is the total amount of resources spent in order to generate the anticipated return.
Simply stated, ROI = Benefit/Cost and is expressed as the percentage gain for the expected life of the project. The ROI calculation measures how effectively a business uses its capital. ROI equals the present value of the accumulated net benefits (gross benefits minus the initial investment and ongoing costs) divided by the total project costs, for a specified time period – three to five years is commonly used for IT purchases since technology is often obsolete after five years.
Calculating an accurate return on investment (ROI) is not easy. There are numerous variables – some more significant than others and some very hard to quantify.
Variables include the influence of new technology, unforeseen business issues and even equipment failures. The ROI financial calculation does not account for discount rates, depreciation, or inflation, but still can be an effective way to evaluate a project. This article is only intended to present the basic concepts behind an ROI calculation; not to provide a thorough explanation of the ROI calculation process.
Calculating ROI requires knowing the initial investment costs and the on-going costs as well as an understanding of the expected benefits. This is perhaps the most difficult challenge when it comes to technology projects. Most of the initial costs may be summed up in the sales proposal, but quantifiable benefits are more obscure. This is especially true with technology investments where benefits include such things as increased data accuracy, easy access to information, faster transactions and improved productivity. Such benefits often translate into improved customer service, increased production without raising head-count and better employee retention. Since it is all related to efficiency – getting more done in less time – we can consider the time- savings as a quantifiable measurement among the benefits. Admittedly, this is just one component among the total benefits gained from process improvement and office automation.
The Investment
The investment component of any ROI calculation includes the initial purchase price as well as any additional equipment or resources necessary to implement and support the solution. Indeed, ‘resources’ includes cash money and equipment as well as ‘human resources’ or ‘time’; after all, time is money. Be sure to include any training costs as well as expenses associated with application support. Training is a good example of an investment that increases ROI. Likewise, software support contracts protect your investment. New software acquisitions should be standards-based and easily implemented within your current IT infrastructure in order to control start-up costs. On-going support from the vendor should be available when and where you need it and should include software updates. Reliability of the application platform will also affect support costs – remember the high cost of down-time. When you consider all these up-front expense items, it’s easy to appreciate the cost benefits of the software solutions. Here is a partial list of costs to consider if you choose a traditional software purchase:
1) Software Licenses
2) Annual support agreements
3) Computer Hardware
4) Professional Planning and Implementation Services
5) Training
The Return
The benefits gained (the return) will also include some hard-to-measure line items. While we stated earlier that the return is the total amount of money gained, it is also measured in time savings and administrative cost reductions. Better facility investment decisions can be made when timely and accurate information, such as from resource utilization reports, is available. There are more obscure benefits such as reduced employee turn-over that comes from providing employees with easy-to-use tools, which not only increase productivity, but also improve job satisfaction. Here is a partial list of benefits you should consider:
1) Time savings (measured in rands per month or year)
2) Statistical data for asset management and cost alignment
3) Facility cost containment (cost avoidance and cost reduction)
4) Improved customer service, both in quality and response time
5) Reduced employee cost (lower turnover, lower training costs)
Simple Example
The administrative assistant spends one hour each day scheduling and re-scheduling meeting rooms and training rooms. You purchase a meeting room scheduling software application designed to automate the process so that the job gets done in just 15 minutes, saving 45 minutes a day. This administrative assistant can put that extra time into much more productive work. Given that there are 20 working days in a month, that’s a time savings of 15 hours a month – nearly two days! If you calculate this employee’s cost at $20 per hour, that’s $300 saved each month or $3600 per year. For this example, let’s assume the company spends $20,000 on the software. Is the investment worth making?
Let’s consider this simple equation using twenty employees and a 5-year life cycle.
ROI = [(Payback – Investment)/Investment]*100 ROI = [(5*(20*$3600) – $20000)/$20000] * 100 ROI = [($360000 – $20000)/$20000] * 100 ROI = ($34000/$20000) *100 ROI = 170%
What if there were hundred administrative assistants and they all experienced the same benefit? Is it then considered a good investment?
ROI = [(5*(100*$3600) – $20,000)/$20,000] * 100 ROI = [($1,800 000 – $20,000)/$20,000] * 100 ROI = ($1,780 000/$20,000) *100 ROI = 8900%
Remember, this is just a very simple example. Use your employee cost-of-time figures based on actual costs and the number of employees to estimate the real benefit. Also consider that many employees who don’t actually use the software, such as executives, will benefit by not wasting their time due to improper or erroneous meeting room scheduling. This is a real benefit and should also be included.
While ROI tells you what percentage return you might expect over a specified period of time, it does not tell you anything about the strategic potential of the project. While a 8900% return may be attractive you should also consider the potential impact that any software investment has on the entire enterprise. How many other people might be expected to benefit from this investment? Can the application be implemented across the entire organization and provide more benefit? Is the application flexible enough and configurable so as to meet the needs of other departments and more employees? A leveraged investment results in more ROI.
Rendezvous
If you’re looking for an advanced software solution that gives you a new dimension in scheduling and meeting room management, meet Rendezvous. Rendezvous is a product of NFS Hospitality Corporation, a leading international provider of hospitality solutions. With installations in more than 10 countries and offices in 4 countries, Rendezvous is the ultimate choice for small to very large corporations. The Rendezvous suite of scheduling software is designed to help you manage all the many details that must be addressed to insure a trouble-free meeting or event. With Rendezvous, the benefits never stop. You can maximize your room and resources utilization, streamline communications with service providers, provide a first-class service to your staff and visitors. In short, with Rendezvous you’ve got the ideal meeting planning tool.
Rendezvous - Beyond A Scheduling Tool! The right choice for managing tomorrow's events
Having installed Rendezvous for hundreds of clients, large and small, we have managed to assist many users in streamlining their business processes. This leads to improved efficiency and better service to their “customers”. In the broad context of this document, we use the term “customer” in the context of both internal and external customers. This document seeks to provide an insight into how Rendezvous users are using the powerful functionality of the software to achieve business benefits beyond the basic scheduling tasks.
Automating Complex Booking Arrangements:
How much time could you save if your booking system was able to book the items required automatically for a complex meeting such as a video conference? With Rendezvous, groups of items (Resources, Food Service, People) can be scheduled automatically for complex meetings, making the booking process much faster and also ensuring that every detail relating to video conference and other multi-property meetings can be taken care of. For example, a meeting involving multiple rooms each with a different layout, requiring different equipment to be provided could take hours to schedule. With Rendezvous, by simply selecting the rooms and appropriate layouts for a specific meeting type, the scheduling and thus the management of all items required can be fully automated. This Auto Scheduler feature can save you hours of valuable time.
Managing Set up and Breakdown Times:
How often have you not allowed enough time to prepare for an important meeting requiring equipment, catering or a room layout change? Using Rendezvous, with fully automated set-up/breakdown management, you can now relax. By selecting a specific room layout or equipment required for your meeting, Rendezvous will automatically add the appropriate set-up and breakdown time to ensure that your meeting plans are perfect. As an example, if there is a late booking of a video conference that requires special equipment (projector, bridge, phone, etc) Rendezvous will, by checking resource availability, add the appropriate set-up/breakdown time to the meeting as well as alert the department responsible.
Package Handling for Efficient Bookings:
How could you save time in planning major events or conferences that require different combinations of things for different groups? For example, planning an event involving a few hundred people organized in groups can be a major task. The schedule could include full day meetings that include breakfast, lunch, dinner, AM/PM breaks and possibly AV equipment, while a social function, like a dinner reception may include a special menu, champagne toast and overnight guest room accommodation. With the package handling utility in Rendezvous, individual items collectively become customized packages that are applied on a per person basis, including package cost, package expenses, discount and special notes captured against each item making the booking process a breeze!
Meet and Greet – First Impressions Count:
Are you constantly challenged by last minute booking changes and the impact of dealing with Visitors? The Rendezvous Visitor Management Module lets you capture visitor details, arrival and travel arrangements as well as preferences (e.g. catering) to ensure a positive first impression. With security in mind, visitor badges, including photo badging, can also be accommodated.
Dealing with Last Minute Changes:
As conference manager, you have made the perfect plan for tomorrow. By 9.00am on the day a number of changes need to be made to meeting arrangements and you now need to communicate these easily to meeting hosts and service providers. The Rendezvous Tracker utility immediately alerts the relevant service department as you make changes and allows the department to acknowledge receipt of instructions. In addition, the Rendezvous Rolling Display feature enables you to communicate meeting room status and other changes to be conveniently displayed on plasma screens throughout your facility, ensuring hosts and guests are kept fully informed.
Cost Centre Validation and Cost Centre Capture:
Most commercial scheduling systems do not offer event management features beyond the simple booking process. With the Rendezvous suite of scheduling solutions, things like Cost Centre Code or Project Codes can be automatically validated ensuring that meeting costs are correctly captured and posted for accurate department accounting.
In addition, comprehensive reporting of costs by department and interfaces to the leading Accounting and ERP systems guarantee a seamless flow of information between the booking and billing system, saving hours of manual effort in charge reconciliation after the event!
Browser Based for Quick Deployment:
Today, the IT resources required to deploy and maintain software across the organisation can be a major commercial and technical issue. Think about how easy and cost effective it would be to have a “zero deployment” scheduling solution, with access to users controlled only by user profiles and advanced features such as connectivity to the corporate Exchange server and Outlook for seamless access. As a Browser-based solution, Rendezvous meets all these requirements, making it the most cost effective solution to install and support!
Summary
Scheduling applications help businesses get more done in less time and with fewer resources. The result is a more productive business environment creating more time to devote to important business activities. What is the actual return on an investment in a meeting room management software? The greatest benefit is efficiency. How much does it actually cost to schedule a meeting? Too much time is wasted with phone, fax and email just to arrange the best time and place for a meeting – and then to reschedule when something inevitably changes. Is it acceptable to ‘lose’ two hours to schedule a one-hour meeting? In other words, what is the ROI for using an efficient scheduling solution? Automating repetitive tasks provides time savings, reduced errors and important statistical data used to make better resource management decisions.
The second benefit is better asset utilization. Rooms and equipment can be allocated more effectively when room availability and characteristics are quickly and accurately determined and put to best use. Event coordinators as well as individual self-service schedulers can all benefit from enterprise scheduling software. The benefits extend to facility managers, instructors, service providers and many other employees. The result is better resource utilization, facility management and asset cost control. Companies cannot afford to ignore the high cost of underutilized assets. Efficient resource management improves the financial strength of organizations. And with today’s budget constraints and limited assets, survival often depends on how effectively businesses manage their valuable resources. Efficient enterprise-wide scheduling solutions provide demonstrable ROI.
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