You'll most likely be asked to 'prove the ROI' if you want to persuade your boss to purchase EHS software.
What exactly does that indicate? When someone inquires about 'ROI,' or 'return on investment,' they are essentially asking, 'How much will this cost, and how much will I receive back?'
To assist you in answering that question, we've outlined the procedures we follow to assess how much time and money a company can save by implementing EHS software.
5 Steps to Calculate EHS Software ROI
- Determine how many people will be using the software
- Calculate how much time your core team spends on common tasks
- Calculate the amount of time you could save
- Identify further cost-cutting opportunities
- Determine the software's genuine cost
Determine how many people will be using the software
These are divided into two categories: 'heavy' and 'light' users. Members of your core EHS team, as well as any consultants you work with, are heavy users. Light users in your facility are often non-EHS employees who will use the software to report near misses or record risk observations.
Calculate how much time your core team spends on common tasks
To derive a good estimate, we look at how many hours each EHS employee spends per month on duties like as:
- Record-keeping and updating
- Data uploading
- Managing formulas and correcting data errors
- Assigning tasks, notifications, and follow-ups
- Data analysis and report writing
- Preparing for external audits
- carrying out risk assessments
Calculate the amount of time you could save
To do so, we examine how much time a typical employee may save by using EHS software on each of the duties listed above.
Let's say one of your core EHS team members spends eight hours a month preparing environmental compliance reports. They can complete the same task in 4 hours every month using software. If you pay them $35 per hour to do this job, each employee will save $1680 over the course of a year.
When you consider how much time you'll save on chores like reporting, sending notifications, and searching for papers, the savings might pile up quickly.
Identify further cost-cutting opportunities
Of course, saving time isn't the only advantage of EHS software. EHS software can also assist companies avoid events and the costs that come with them, including legal fees, medical and workers' compensation costs, fines, wasted administrative time, and related travel expenses. You'll want to account for these in your ROI calculation.
Determine the software's genuine cost
When you buy a car, the total cost of ownership will be higher than the sticker price.
Similarly, the cost of software extends beyond the initial purchase price. We recommend firms to examine the 3-year cost of ownership whether selecting commercial software versus a homemade solution. This covers services such as implementation, training, and continuing maintenance. Remember that cloud-based software uses fewer resources and includes maintenance.
Steps to take next
You may reassure your CEO and CFO that an investment in EHS software is money well spent by demonstrating the actual cost and time savings (as well as non-financial benefits). It's not always easy to get management permission for EHS software, but it's definitely worth the effort. You'll be well-positioned to get buy-in for your software endeavor if you follow these guidelines. CloudApper Safety's team is available to help you every step of the way.