Introduction to Cost-Benefit Analysis in Time Tracking
Understanding the financial implications of implementing a time tracking system is crucial for businesses of all sizes. A cost-benefit analysis helps organizations assess the potential returns on investment (ROI) from adopting a solution like Mortimer. This analysis considers various factors, including time savings, payroll accuracy, and improved productivity, against the costs associated with deploying and maintaining the system.
The Financial Impact of Implementing Mortimer
Mortimer is designed to provide significant cost savings and efficiency gains for businesses. Key areas where Mortimer positively impacts the bottom line include:
- Reduced Payroll Errors: By easing accessibility to time tracking, Mortimer minimizes human errors in payroll processing, saving costs associated with overpayments and corrections. Read up on our payroll integrations article, to get up to speed on payroll optimization. Up to speed with Mortimers payroll integrations
- Increased Productivity: Mortimer’s user-friendly design and mobile accessibility lead to better time management and higher productivity among employees.
- Time Savings: Automated reports and integrations with payroll systems reduce administrative time, allowing staff to focus on more value-added activities.
Calculating ROI with Mortimer
To calculate the ROI of implementing Mortimer, businesses should consider:
- Initial Setup Costs: Including any hardware and software fees, as well as training and implementation services.
- Operational Savings: Reduced labor costs due to fewer payroll errors, lower administrative overhead, and increased employee productivity.
- Intangible Benefits: Improved employee satisfaction, better compliance with labor laws, and enhanced data-driven decision-making.
ROI calculation in practice
At SmartSheet.com you can see a list of templates with various ways of calculating the ROI of implementing time tracking software. However, we have made an example, that can show, what an ROI calculation might look like in practice
WidgetWorks ROI calculation
Initial Costs:
- Software Purchase Price (SPP): Cost of acquiring the time tracking software.
- Hardware and Infrastructure (HI): Any needed updates or new purchases to support the software.
- Installation and Integration (II): Costs associated with setting up the software and integrating it with existing systems.
- Training Costs (TC): Expenses related to training employees and managers on how to use the new system.
Operating Costs:
- Annual Software Maintenance (ASM): Yearly costs for software updates and maintenance.
- Ongoing Training (OT): Costs for ongoing or refresher training sessions for staff.
Efficiency Gains:
- Labor Cost Savings (LCS): Savings from reducing payroll errors. This could be estimated as a percentage of total payroll.
- Administrative Time Savings (ATS): Savings from reduced administrative tasks, translated into cost savings based on administrative staff salaries.
- Productivity Gain (PG): Increased productivity from employees; this could be estimated as a percentage increase in output or revenue.
Intangible Benefits:
While harder to quantify, these should still be considered in the decision-making process:
- Employee Satisfaction Increase (ESI): This could lead to lower turnover rates, which saves costs on hiring and training new employees.
- Compliance and Risk Mitigation (CRM): Better adherence to labor laws could reduce the risk of costly legal issues or fines.
- Data-Driven Decisions (DDD): Enhanced ability to make informed decisions that could lead to operational improvements and cost savings.
ROI Calculation:
The ROI can be calculated over a certain period, typically a year. We'll use a simplified formula:
ROI=((LCS+ATS+PG)−(SPP+HI+II+TC+ASM+OT)) / (SPP+HI+II+TC )
If we also want to factor in the intangible benefits, they wouldn't directly add to the ROI in numerical terms but should be part of the qualitative assessment.
Example Numbers:
Let's say WidgetWorks has estimated the following for the first year:
- SPP = $10,000
- HI = $2,000
- II = $3,000
- TC = $5,000
- ASM = $2,000
- OT = $1,000
- LCS = $15,000
- ATS = $7,000
- PG = estimated additional value of $10,000
Then, their ROI calculation for the first year would be:
Equal to an ROI of 45%! Obviously this number is totally fictional, and you should try and adjust each value to your business case. Have fun 🥳
Conclusion: Maximizing Value with Mortimer
Investing in Mortimer can lead to substantial cost savings and operational efficiencies for businesses. By conducting a thorough cost-benefit analysis, companies can make an informed decision about integrating Mortimer into their time tracking practices.
Call to Action
Discover how Mortimer can provide a positive return on investment for your business. Visit Mortimer.pro to learn more about our time tracking solutions and schedule a demo today. Let us help you conduct a cost-benefit analysis tailored to your organization's needs and start saving time and money with Mortimer.
