How to Calculate Your ROI for HRMS Manager Self-Service
Self-Service is a growing trend within most HRMS applications. Providing 24/7 access to data is a benefit to managers and employees and can provide cost savings to your organization. While the decision to transition to HRMS manager self-service is often made without deep financial analysis, as it is seen as a no-brainer.
Calculating the ROI for HRMS manager self-service can ensure that you truly see the future benefits of this functionality. ROI calculation can also help you during the HRMS selection process, is manager self-service included in your HRMS? Or is it considered an additional module which will incur extra cost?
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1. Current costs
The first step in making this calculation is to document the costs currently associated with the transactions you plan to automate through HRMS manager self-service. It’s helpful to establish for each transaction the following: current roles involved in the transaction, systems used (ERP, paper, email, etc.), time involved, as well as any additional costs such as postage for follow up confirmations. Don’t forget to include the staffing costs, such as estimating how much of an HR Professional’s time is spent weekly to coordinate each transaction in the current state.
2. Future costs
Once you have your list, then it’s time to add in the future costs per transaction. While some of the routine paper pushing and emailing of approvals may disappear, there may be new costs, such as having a workflow administrator to monitor the transactions for errors, as well as licensing costs or additional work needed by the HR Business Partner to educate a manager or employee in how to complete a transaction. As this is new functionality, be sure that there are not hidden or additional costs that will adversely impact your numbers.
3. Calculating your manager self-service ROI
To calculate your ROI, subtract your new self-service cost of doing business from your prior world. Then, annualize to get the complete view.
If your ROI costs are less than impressive, it’s a good idea to review the details. New HRMS fees or additional or more costly headcount could detract from this effort, as well as impact morale with existing HR staff who can become fearful losing a job through this automation. As well, the ROI needs to align with the overall plan to roll out this functionality. If it’s going to be a hard sell to managers or employees, if the ROI does not justify the efforts. It may make more sense to delay the project, or to start smaller with only a limited number of transactions in order to test out your estimates and employee feedback.
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