Software can sometimes be an expensive commodity. Something that seems eminently desirable when you are discussing the concept can suddenly result in a sharp intake of breath and a failure of corporate nerve when the quote for doing the work arrives.

Yet the fact remains that having software that really does support your business can be one the finest ways to increase trade and profit margins, cut overheads, provide enhanced quality of service and keep your best staff

And all of these things have a tangible value. The safest way to assess the viability of a project is

1. Assess the cost of NOT doing it

2. Try to put a monetary value on the benefits that you expect to accrue from doing it. The factors listed above are a good place to start, but there could be many more. They will be different for each category of user.
3. Assess the expected life of your system. Five years would be a typical figure.

4. Assess the total cost of the system over that period, including initial procurement and deployment costs, training, likely upgrades and ongoing maintenance, support and licensing.

5. Now reduce the figure you arrived at in 4 to a cost per user per year. It should now be a fairly straightforward, if a little laborious, to compare this with the potential monetary benefits arrived at in 2. A comparison with the combined total of 1 and 2 may also be revealing.

6. There are also some fairly blunt, but effective, instruments you can use to assess ROI. They will often give you a quick, quite accurate idea of whether you can achieve good ROI. Here are two common examples, but you can probably dream up your own.

a. What is the annual cost as a percentage of your current gross profit? Is it reasonable to expect your new system effect on business to increase trade by more than that amount?

b. What is the annual cost as a percentage of your wage bill? Will the system bring efficiencies that enable fixed staff costs to be reduced? Will you need fewer temps? Can some roles be deskilled and staff costs reduced in this way?

Return on investment is really the only way to assess the viability of any software project, barring the smallest maybe. The implications and costs involved are just too large. But a simple ROI study can prevent a costly mistake being made, either through that failure of corporate nerve or a misunderstanding of the benefits. It may not prevent the sharp intake of breath when the price arrives though.