Building the business case ROI for SaaS HR

1. Building The ROI for SaaS HR Solutions for Your Organization
Phase #1. Benchmark Your Approach versus the Competition.
Benchmarking against the competition is a great way to “Build the Business Case” and demonstrate
meaningful ROI, benefits and targeted goals. Accordingly, demonstrating how the competition is using
and benefiting is step one.
Step One: Create your benchmark comparison. It is difficult to improve what is not measured. Evaluating
performance relative to competitors and industry standard benchmarks enables executives and managers
to assess performance regardless of the economy and irrespective to industry slumps. ROI benchmarking
to build the business case should be done for your industry vertical and based on your company’s goals.
Top Performer Benchmark for service
Measure (Desired Outcome) business with 500 full-time W-2
employees
Revenue Per Full-Time Employee
$230,858
(Scalability of the workforce)
Employee Commitment
90%+
(Retention and productivity measure)
Percent of employees with positive employee reviews
75% have satisfied manager after 1st year
after 12 months (Quality-of-hire)
$500 per hourly and $5,000 per salaried
Cost-per-hire
employee
•Employee: 3.1 years
Average tenure
•Manager: 4.6 years
•Employee: 22%
Average turnover rate
•Manager: 14%
Staff utilization and productivity (schedule efficiencies) 85%+
Human capital cost per FTE (HR Cost Effectiveness) $753.00
Training (Percentage of Employees Completed
Development Program and/or On-Track To Complete 99%
the Program)
Training (Hours per month per employee) 3.5
EEOC Complaints, Litigations (#) 0 per year
Safety Incidents (#) <1 per month
Onboarding to Success (# of days) <30 days
Step two: Discuss and create consensus on the areas to focus on for improvement.
Ephor Group | 1-(800) 379-9330 | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046

2. Building The ROI for SaaS HR Solutions for Your Organization
Phase #2. Create an Assumption-Driven ROI Model Based on Targeted Improvements.
Most important when creating an ROI analysis is demonstrating how the solution will impact and align
with the overall business strategy. The key is to create consensus on how HR fits with the business.
While each company’s specific goals will differ, evidence abounds that demonstrates that what gets
measured gets improved.
Step one: Set goals for each HR process and size the P&L impact.
Workforce
Consequences of Poor or Inadequate Workforce
Effectiveness Cost-Benefit Analysis
Effectiveness
Category
 Misaligned Compensation and Benefit against the Compensation not aligned with the market causes
market results in hiring slugs instead of stars turnover
 Demotivated workforce manifests morale On average turnover cost is $10k per hourly and
Compensation and problem which causes inefficiency, cultural $50 per salaried professional! SHRM
Benefits issues, and worsens productivity
 Benefits are a key differentiator for many worker The right benefits package targeted to the right
segments segment can lower total compensation costs i.e.
reduce the fully loaded labor cost per employee
 Fines, litigations, EEOC complaints, and safety Improved staff utilization , resource efficiency, and
incidents legal costs. Loss of control EEOC leads employee productivity; a 5% employee
to have to hire and pay differently over hiring and productivity gain does not increase costs and goes
pay straight to EBITDA
 When trust issues are present it becomes Average compliance cost is $5,411 per employee
Employee management versus the workforce (20-499 employees US NDL)
Relations  Reactive management leads to adult day-care Business owners spend up to 40 percent of their
causes low employee commitment time consumed by employer-related paperwork.
SBA
 A bad reputation as a firm reduces attractiveness Employee Incidents Resolved Satisfactorily %
as a place to work, performance of current Improvement (Average settlement is $273k (US
employees, and is viewed poorly by the public NDL)
 Reduced employee satisfaction Revenue-Per-FTE , Profits-Per-FTE and Gross Profit
benchmarked against industry averages improves
results
 Gaps in skill sets and organizational capabilities HR Administrative Costs are on average $1,253 for
the average organization vs. <$500 per employee
for firms with strategic HR
 Without training and career development Onboarding success rates (80% versus 50% for
Organizational productivity does not improve and leaders and many positions)
Development managers are not developed
 No internal career development opportunities 20% reduction in insurance rates
increases turnover
 Inability to react to environment. The average U.S. employer spends more than 32
hours and $900 per employee on employee
training. ASTD
 Inability to meet marketplace demands Improve employee to manager ratio (varies by
industry)
 One-third of all bad hiring decisions are a direct
result of pressure to fill a position, with hiring
Hire more ‘A Players’ , less turnover
managers often relying on gut decisions when
Workforce they are in a hurry.
Planning  Costs and opportunities not aligned: The war for Reduce overtime costs
‘A Player’ talent
 Customer satisfaction declines Decrease key hiring metrics: Time-to-Fill and
 Skill trade acts as a determinant to growth Cost-Per-Hire, Number of Positions Open
Ephor Group | 1-(800) 379-9330 | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046

3. SaaS HR Buyer’s Guide
Historically, the cost to implement, manage, and utilize a
Criteria Feature/Fact
HR system based on a licensed software model has
1. Vendor Credibility
inhibited the routine use of these systems. These
# of Customers Added Per Year with SaaS
licensed software rollouts (non-SaaS systems) have Notable Clients
additionally required mass customization and coding to fit Notable Partners
workflow processes and end-user adoption has been Financial Stability
limited due to expense. Today, there are a significant 2. Client Fit
number of organizations that, due to performance
Verticals
mandates and/or regulations, are now required to
automate, standardize, document, and streamline Local Offices
processes and add support functions. 3. Technology Solution Fit
SaaS multitenant scalable platform with Workflow, Real-time Reporting, CRM.
To date, the technology capabilities of these products Configurability
have outpaced the adoption and use. In fact, the majority Scalability
of implementations deployed have failed to fully utilize Ease of Interoperability (Integration)
the entire suite of possibilities due to the complexity of What vendors are integrated?
both deployment and ongoing, routine use of these Performance Management (see PM Feature Comparison)
systems. Business Management Reporting
Global Capabilities
Today’s SaaS market leaders are known for: “The Best Talent Management
ERP (Enterprise Resource Planning)
Deployment and Service”, adoption by employees and
4. Sizzle Features - What are the sizzle features? Compensation Planning, Baseball Card
constituents versus top-down roll-out; i.e. the need for a
WOW Sizzle Feature #1
solution that works on-demand, and provides a series of
add-on products and services to meet organizational
workforce needs. WOW Sizzle Feature #2
5. Cost and Implementation Time/Resource Estimates - What is the ROI? What are the
Contact a professional to put together a specific ROI Pricing Model
Results? How many projects do they start but not complete? Do they publish
assessment for your organization. S (S )?
Methodology - What is the philosophy of the company? Does the process align
?
Analytics and Reporting - What daily, weekly and monthly reports and metrics
?
Cost-Benefit Analysis C ?
Setup Time
Implementation Time to Implement Core
Training Time and Costs
Monthly Average Cost
Total Cost Average Per Client for 3 Years
ROI Expectations
SaaS Performance Management Provider A Provider B Provider C
Application Providers
HR Consulting Services Y - Enteprise Y - E & SMB Nothing beyond
implementation support.
Performance Management Y - Enteprise Y - E & SMB Y - Enteprise
Goals Management Y - Enteprise Y - E & SMB Y - Enteprise
Collaboration Y - Enteprise Y - E & SMB Y - Enteprise
Automated Workflow Y - Enteprise Y - E & SMB Y - Enteprise
Employee Self Service Y - Enteprise Y - E & SMB Y - Enteprise
Manager Self Service Y - Enteprise Y - E & SMB Y - Enteprise
Best Practices Templates, Competencies Y - Enteprise Y - E & SMB N
Templates for Metrics/Dashboard Y - Enteprise Y - E & SMB Y - Enteprise
Y - Via Partners Y - E & SMB Y - Enteprise
Learning Management System
Y - Via Partners Y - E & SMB N
Training Content
Y - Enteprise Y - E & SMB Y - Enteprise
Succession
Y - Enteprise Add-On Y - E & SMB Y - Enteprise
Surveys
Y - Enteprise Y - E & SMB Y - Enteprise
Communications
Y - Enteprise Y - E & SMB Y - Enteprise
Org. Chart
Career Management N Y - E & SMB Y - Enteprise
Talent Management Y - Enteprise N Y - Enteprise
Ephor Group | 1-(800) 379-9330 | www.ephorgroup.com | 24 E. Greenway Plaza Suite 440 | Houston, TX 77046