Don’t overlook these benefits when calculating the ROI of spend management.

​Calculating a return on investment for new software purchases is a good way to make decisions about where to spend your time and capital. It quantifies the benefits resulting from the software’s use and can therefore serve as a metric to compare the relative value of different projects. To use it for comparison purposes, however, requires consistency of measurement across solutions, even when measurement can be difficult. 

Clearly, hard benefits — such as money saved and increased profitability — can be quantified up front and evaluated over time. For the purposes of this article, however, we are focused on “soft” benefits — time saved, increased user satisfaction, and faster, more accurate data for forecasting and analysis. While these are harder to measure, assigning some value to them, even a relative weighting, will allow you to compare competing projects. 

Some soft benefits need to be experienced to be believed. We frequently hear from customers that they’re experiencing a much better spend culture across the organization thanks to Airbase. This results from removing friction, uncertainty, and frustrations for employees and accounting teams when it comes to spending company money. It’s hard to quantify, but it has a huge impact.

In an era when bad decisions are felt more than ever, let your ROI calculations guide you toward making good ones. First, let’s make sure you have all the pieces. Let’s take a look at some of the frequently overlooked benefits of spend management. 

Measuring the soft benefits of spend management. 

Soft benefits range from those that are easily measured and tracked — like time saved by accounting teams — to those that are harder to measure — like more timely, better quality data for analysis. 

The difficulty of measuring a benefit should not exclude you from assigning a value so that you can more effectively compare one project to another. For example, you might use a scale of one to five to assign value to benefits like consolidation, where one system is a five and another is a two.

1. Time savings: time is money.

Automation increases productivity by saving time. Whether resources are redeployed into other higher-value work, or are simply not hired as a company scales, the benefit to the company can be measured as the fully loaded cost of the employee doing the work multiplied by the number of hours saved.

Measuring the value of these savings can be as simple as: the number of hours saved per month multiplied by the costs of maintaining an employee, or by looking at macrotrends like time-to-close. As a benchmark, Airbase customers like Instawork consistently report cutting their time-to-close by at least half after implementing our system. 

If you save two weeks a month on your time-to-close, you could estimate that the total time savings per one full-time accounting person would be: 80 hours (two weeks) multiplied by the cost of that employee. 

When Airbase collaborated with PYMNTS on a survey of 225 leaders in mid-market companies, they were asked how much time their teams spent on manual work in accounts payable — the answer was 42%. That’s around 17 hours a week.

2. User adoption.

Difficult to quantify but important to consider, user satisfaction will ensure adoption and increase productivity. Software that is implemented but not fully used has a negative impact on ROI. If employees don’t like using a system for submitting expenses, arranging travel, or raising a PO, they will use alternative channels or won’t use the system properly.

If your ROI for two different alternative systems are 10% apart, but you think that one will only have 80% full adoption by your employees, an adjustment should be made to the ROI of the system that could have poor user adoption. You may find that this adjustment shifts your priority. 

Increasingly, companies are considering this factor when calculating the cost of company turnover, with the assumption that bad processes and time-wasting systems can be part of the reason someone on your accounting team seeks out employment elsewhere.

Systems do make a difference! One of our customers shared that when he was offered a new role as a Controller, he would only accept it if he could bring Airbase with him.

3. Better, more timely data for decision-making.

This is another benefit that is difficult to quantify, but its value can be seen clearly when situations are particularly critical. When the pandemic put the brakes on the economy, our users reported that they were able to rapidly report all spending — cards, invoices, and reimbursements — to their boards. They could also rapidly adjust company-wide spending by shifting approval flows, and triggering card spend limits and controls. Throughout precedented and unprecedented times, our customers maintain control and visibility as well as retrievable, up-to-date data

4. Other factors that have a positive business impact.

• Consolidation: A consolidated system for all non-payroll spend provides consistent workflows, consolidated data, ease of use, and savings via a reduction in tools. 
• Time-to-value: This can be an important metric for comparing one alternative to another. For two projects with similar ROIs, the one with the lower time-to-value could influence prioritization.
• Scalability: A more scalable product can be expected to have a longer time-to-value because it will be more complex, with configurations that can be adjusted to reflect the needs of your company as it grows. Scalability saves short-term or medium-term rip-and-replace costs. Again, this is a helpful metric when comparing two or more alternatives in the same space. This is something that you can easily quantify based on your own experience with the costs associated with implementing new software.
• Flexibility: How flexible is a product to the needs of your operations — both today and tomorrow? If a product is configurable, it will have a higher score for flexibility so that it can be tailored to a variety of use cases. There is also flexibility in terms of integrations and options for how the product can be used. For example, Airbase has a flexible card program which might be valued highly by a company that wants to keep its existing cards.
• Healthy spend culture: The magic of Airbase. We consistently hear things from our users, like “I knew it was going to help me close faster and control risks, I just didn’t know it would have such a positive impact across the whole organization.”

When it comes to the soft benefits of spend management, it’s often best to see a platform in action for yourself. Book a demo and we’ll give you a personal tour!