Everyone is talking about the benefits of implementing cloud accounting software, but without performing a proper software ROI analysis, how do you know that making the change is going to be worth it from a bottom line perspective?
If you want to know for sure whether or not a new SaaS application will be worth the investment of time and money, this kind of ROI analysis is key to understanding whether or not it would be the right decision.
To help out with that, FloQast has put together a free Cloud Accounting SaaS ROI Calculator template, accessible as a public Google Sheet. You can use it to determine the ROI of FloQast’s close management software, or just about any SaaS application where you can quantify the time savings for your team.
The screenshot above shows the ROI estimate for a team of 15 accountants saving approximately 5 days per month. You can modify a variety of assumptions on the Assumptions tab, including:
- Number of users
- Average salary
- Fully loaded cost multiplier (to account for overhead and benefits)
- Time savings in terms of hours
- Upfront and annual software costs
- Internal administration time, both upfront and ongoing
- Upfront and ongoing training time
Methodology of the ROI Analysis Calculator
This ROI analysis calculator template was created in conjunction with Amalgam Insights, a consulting and strategy firm focused on the transformative value of technology consumption management.
It’s based on the methodology used in Amalgam’s Business Value Analysis of FloQast, but you can use it to calculate ROI for any subscription-based app that’s designed to enhance team productivity.
The template considers:
- Costs of implementation, including labor and up front vendor costs
- Costs of ongoing software subscriptions, consulting, and internal labor costs of administration and training
- Benefits of enhanced team productivity in terms of dollars from improved close collaboration, trial balance tie out automation for reconciliations, and process automation to reduce the time necessary to close the books
- Cumulative costs, net value, and ROI over five years
Click here to access the template and copy it to your own Google Drive. Or you can download a copy in Excel format — just follow the instructions on the Overview tab.
Don’t Forget About Qualitative Benefits
In addition to quantifying ROI, you should also consider the qualitative benefits of a new application, especially when it comes to close management software. In particular, it’s important to assess:
- Collaborative Value: Cloud accounting solutions allow employees to verify, authorize, and update results regardless of physical location to enable greater work-life flexibility and balance. This leads to increased job satisfaction and loyalty, helping to reduce turnover and associated costs. In addition, enhanced transparency among team members increases accountability and allows team members to work in parallel, accelerating completion of tasks that involve multiple staff.
- Executive Value: When an application enhances team productivity, the benefits also flow up to the C Suite. When it comes to close management software, executives get assurance that the financials are complete on a monthly, quarterly, and annual basis for budget and investment planning without the need to re-open the books post-close. They also have greater confidence in the internal controls in the accounting department leading to a successful audit.
For a full description of collaborative and executive value, as well as how that ties back to implementing close management software, download the Business Value Analysis prepared by Amalgam Insights.
What’s Not Included in the Template
To keep the template from getting too bloated, we’ve left out some items you may also want to consider, such as cost savings from a more streamlined audit. Some of our customers have reported reducing audit costs by 10% following implementation of FloQast.
This cost savings can be substantial, but depends on your unique situation, so we’ve left it out for now. But if you’d like to include it, you’re welcome to make a copy of this template and modify to your heart’s content.
This article was originally posted on FloQast's blog, which you can visit here.