As an HR professional, investing in an HRIS software made to save time on human resources-related tasks should be an obvious choice. After all, not only can an HRIS assist you in strategic decision-making, but it also frees you up to actually focus on important, big-picture thinking instead of menial daily tasks.
That being said, it’s not uncommon for senior decision-makers to hesitate when it comes to investing in HR technology, viewing it as more of a bonus than a necessity. You may wonder how much time and money it takes to do administrative tasks manually, and how much you’d actually save by introducing an HRIS.
When you actually do the math, you’ll probably find that the numbers concretely demonstrate that an HRIS is, in fact, worth it. This HRIS ROI calculator will show you how to determine the real dollar impact of an HRIS on your organization’s bottom line.
How to create an HRIS ROI calculator?
ROI is a simple formula: net gain divided by total cost multiplied by 100. To make this calculation, you’ll have to find a few figures:
- How much your desired HRIS will cost
- How much money your HRIS will save you
The first figure is relatively simple to find. It’ll involve the following elements:
- Annual cost of the HRIS including subscription fees, customer support, and data storage
- Set-up costs including the time it will take you to configure the HRIS, import data, and train your team on it
- Ongoing expenses such as any maintenance time
These exact numbers will vary depending on the HRIS you choose but, for reference, a 2022 Software Path survey determined that the average HRIS budget is $210 per month per use. Users are people with full access to the HRIS such as HR administrators, payroll specialists, talent management specialists, and recruiters.
HRIS net gain
Calculating how much money your HRIS will save you is a bit trickier than figuring out how much it costs. As part of this calculation, you’ll have to consider all of the areas where your HRIS will make a financial impact. These can include:
- The tasks that you’ll save time doing with an HRIS
- Any money saved by replacing ineffective processes with more functional ones
- Increased productivity, such as people being able to be productive sooner due to smoother employee onboarding processes
- Reduced employee turnover
- Improved time-off management, saving on the cost of unreported PTO days
How an HRIS saves HR teams time?
One of the most important areas to look at is the different ways in which your HRIS saves you time, which will probably be where most of your net gain comes from. There are a number of tasks that an HRIS can automate or speed up for your company. Among these are recruiting, compensation management, KPI tracking, time tracking, data entry, payroll, and so on.
To help you figure out how many hours you’ll save doing each task, you’ll need to track approximately how much time your team currently dedicates to them. Then, you can estimate the time it will take to do the same tasks with an HRIS and be shocked at how much you’ll save.
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Putting it all together
To fully demonstrate how you can calculate the ROI of HRIS, let’s look at a simple example.
Let’s say that your company has 1,000 people and of those, 30 will be users on your HRIS. At $210 per user, the monthly cost of your HRIS can then be estimated to be around $6,300.
Suppose each of the 20 people on your HR team makes an average salary of $30 per hour, adding up to a total of $96,000 per month. And you estimate that an HRIS will save the team about 20 percent of their time, equalling $19,200 a month.
So your ROI would be $19,200 divided by $6,300 or a startling 300 percent. That’s a total savings of $12,900 per month.
Of course, these are all just imaginary numbers, but you get the idea here. When calculating ROI for your organization, aim to work with real data as much as you can and be as honest with your numbers as possible. Ultimately, the business case for implementing an HRIS should be clear.