Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+

Payroll software

Measuring ROI – how to calculate return on investment

by Personnel Today 20 May 2010
by Personnel Today 20 May 2010

The fundamental question underlying any payroll software investment should be: is it worth it? A good investment is basically one which is more of a benefit than cost, but how do measure it?

To understand whether a new HR or payroll software project will deliver a good return on investment (ROI), follow these simple steps:

Calculate costs

What are the costs involved in this project? First, what is the capital cost of the payroll and HR software itself? On top of the ticket price, consider whether you’ll need upgrades over the next three to five years, or additional licenses.

The most widely known formula for calculating the total cost of ownership (TCO) is Gartner Group’s TCO methodology. Put simply, this is a formula for calculating the cost of owning and operating any type of technology.

Gartner’s TCO formula groups all the costs incurred by a technology system under four headings: capital costs, administrative costs, technical support and end-user operations. The headings are an umbrella for virtually every cost involved in using a payroll software application, from buying to installing, maintenance and support.

Put together a team

Once you understand a technology system’s cost, you can begin to calculate the suggested return on this investment – in other words, how does it benefit the business?

Often, it can be helpful to put together a team with representatives from each area of the business impacted by the new payroll software, plus representatives from HR, finance, and IT. Map out what the payroll software will do, noting each process, person and department that will be touched – how will it change?

Number crunch

Crunch the numbers to see how each of these changes will impact bottom line profitability. Look for things such as impact on user productivity, and measurable increases in the number of jobs or items that can be processed in a specific time period.

Sign up to our weekly round-up of HR news and guidance

Receive the Personnel Today Direct e-newsletter every Wednesday

OptOut
This field is for validation purposes and should be left unchanged.

Sometimes, benefits come from a reduction in costs. So, will the payroll software allow the company to reduce resources or administration? Alternatively, the benefit may come from payroll software creating more revenue-generating opportunities – will the business be able to enter new markets or increase market share using this technology?

Try to boil down your number-crunching into a single sentence: ‘We will be doing x to make x better, as measured by x, which is worth x’. When discussing any payroll or HR software project, refer to this sentence to reinforce the project – and its value to your company.FrontierPayrollPyramidNorthgateCeridianBondTeamSpiritAdvanced mktoMunchkin(“589-ITG-580”);

Personnel Today

Personnel Today articles are written by an expert team of award-winning journalists who have been covering HR and L&D for many years. Some of our content is attributed to "Personnel Today" for a number of reasons, including: when numerous authors are associated with writing or editing a piece; or when the author is unknown (particularly for older articles).

previous post
Malmaison & Hotel du Vin HR chief Sean Wheeler to leave for new post at Dorchester Collection
next post
Technology blurs boundaries between work and home for ‘Generation Standby’

You may also like

HMRC taking ‘years’ to fix simple RTI payroll...

28 Feb 2025

Real-time reporting of benefits in kind to start...

30 Oct 2024

Taking off: how careers in payroll are evolving...

6 Sep 2024

Payroll professionals believe future lies in AI

2 Sep 2024

‘Be flexible’ with staff hit by IT outage,...

19 Jul 2024

How to avoid payroll errors when rolling out...

12 Jul 2024

Thousands of Asda staff hit by payroll error

25 Mar 2024

Surrey payroll error sees employees receive wrong wages

5 Mar 2024

The computer says ‘fraud’: how the Post Office...

2 Feb 2024

Leeds City Council selects MHR for HR and...

5 Oct 2023

  • 2025 Employee Communications Report PROMOTED | HR and leadership...Read more
  • The Majority of Employees Have Their Eyes on Their Next Move PROMOTED | A staggering 65%...Read more
  • Prioritising performance management: Strategies for success (webinar) WEBINAR | In today’s fast-paced...Read more
  • Self-Leadership: The Key to Successful Organisations PROMOTED | Eletive is helping businesses...Read more
  • Retaining Female Talent: Four Ways to Reduce Workplace Drop Out PROMOTED | International Women’s Day...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2025

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2025 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Maternity & paternity
    • Shared parental leave
    • Redundancy
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • Brightmine
    • Learn more
    • Products
    • Free trial
    • Request a quote
  • Webinars
  • Advertise
  • OHW+