The implementation of project management software is an investment capable of bringing great returns, but which is not always immediately visible. That is why it is very important to monitor performance indicators that demonstrate this benefit.
Return on Investment (ROI) is one of the main key performance indicators (Key Performance Indicators – KPIs) to evaluate the results that a project management software is capable of bringing to the company.
If you want to better understand what ROI is and how it can help you give more visibility to the return obtained with the implementation of project management software, you are in the right post. Stay with us and have a great reading!
What is ROI?
In practice, ROI is the KPI responsible for determining how much the company gains or loses financially when making an investment. Therefore, every investment must have its ROI monitored.
It is possible to apply this indicator in any project of the company. This includes the acquisition of equipment and tools, marketing and advertising actions, improvement of the team, infrastructure and physical space of the organization and so on.
Only with constant monitoring of the ROI is it possible to measure which projects offer an adequate return for the enterprise in relation to the investment they received from it.
How to calculate ROI?
Contrary to the size of its importance, the calculation of ROI is extremely simple: it is almost intuitive. Just subtract the investment amount from the total amount earned and divide the result by the investment amount. The formula looks like this:
- ROI = (total value earned – investment value) / investment value
Thus, imagine that a company invested R $ 10,000 in a new training project for its commercial executives. Together, after professional development, they managed to increase sales by R $ 50 thousand. The ROI for this project would look like this:
- ROI = (50k – 10k) / 10k
- ROI = 40k / 10k
- ROI = 4
This means that the project obtained a result of four times the investment value. This proves the efficiency of the training of professionals. The same concept can be applied to the gains obtained with the implementation of project management software.
Imagine, then, an example in which the principles of project management through newly implemented management software (at a cost of R $ 50 thousand) were applied to control deadlines . With the tool, the process becomes more efficient and deliveries are more frequent.
The increase in the frequency of deliveries brings a consequent increase in the company’s revenue. As a result, the increase in revenue leads to a total of R $ 150 thousand. In other words, only with greater control of deadlines, the project management software brought a return of three times the amount invested in its implementation.
How does project management software help with ROI?
Deadline control is not the only way for project management software to bring ROI to a company. See, below, what other aspects it can influence when looking for better results.
Demonstrates project efficiency
With project management software, it is possible to have a holistic view of the initiative. Thus, there is greater visibility of factors such as team productivity, bottlenecks in deliveries, use of resources, risks , goals and other aspects that directly affect the results of a project.
Thus, problems can be predicted and avoided, processes can be optimized and resources can be better used. All of this increases the efficiency of the project – which can be demonstrated in the reports offered by the solution.
Analyzes the influence of the project on business success
A project may look perfect and promising, in addition to being very well managed, but none of this matters if it is not relevant to the company’s development.
Project management software allows you to assess how and how much it can affect the company’s performance. In this way, it avoids wasting resources on investments with no potential to generate ROI, in the same way that initiatives that are worth investing in are identified.
Studies the impact of the project on the financial sector
It is possible, with project management software, to analyze how much a project can influence the success of an organization. The tool, however, goes beyond this: it allows to study the economic viability of the project.
This is important because, with positive ROI, it is possible to attract sponsors. This makes monitoring this indicator even more essential for the company: after all, a project that has proven to be promising can attract more investments.
Prioritizes project management according to ROI
In any enterprise, it is normal for several projects to be developed at the same time. However, according to the ROI of each of them, it is possible to determine the priority levels of one in relation to the others.
If there is a need to choose which projects are to be developed, ROI will serve as a key tiebreaker for decision making.
Controls resource consumption
Waste materials, hours of team work and financial resources are some examples of how a mismanaged project can have its costs high and thus prevent getting ROI. With project management software, you can have more control over resources.
In addition, only through the accurate recording of everything that was employed in the project, it is possible to know the real amount invested in it. With this data, you can calculate your ROI more precisely.
In summary, good project management software, in addition to helping to bring ROI to the company’s initiatives, is vital for this indicator to be calculated in the correct way and, thus, can be proven.
Now that you know how important project management software is to your company’s ROI, subscribe to our newsletter! Thus, you will receive exclusive content first hand directly in your inbox!