The calculation in plain language
Calculate how many hours the process consumes each month. Multiply by the fully loaded hourly cost of the people doing the work. Then add the direct cost of mistakes, corrections, missed deadlines, or external fees in a normal month.
| Measure | Formula |
|---|---|
| Monthly handling hours | Minutes per run ÷ 60 × runs per month |
| Monthly labour cost | Monthly handling hours × loaded hourly cost |
| Monthly error cost | Errors per month × average cost per error |
| Current monthly cost | Monthly labour cost + monthly error cost |
| Estimated monthly saving | Current monthly cost × realistic reduction rate |
| Payback period | Implementation cost ÷ estimated monthly saving |
Use conservative inputs
- Measure a normal month, not the worst week of the year.
- Use loaded employment cost where possible, not salary alone.
- Include checking and correction time as part of the process.
- Count only error costs you can explain and defend.
- Assume exceptions, review, and maintenance will remain.
- Add recurring licences, support, monitoring, and change costs.
Worked example: preparing a weekly client report
An operations team prepares 40 reports per month. Each takes 35 minutes across exporting, checking, formatting, and sending. Loaded staff cost is €42 per hour. Two reports per month need correction, costing about €90 each.
That equals 23.3 handling hours, €980 in labour, and €180 in error cost: €1,160 per month. If a focused improvement removes 70% of that cost, estimated savings are €812 per month or €9,744 per year. At a €6,000 implementation cost, simple payback is about 7.4 months.
This does not prove the project should proceed. It creates a basis for checking feasibility, adoption, recurring cost, and whether the released capacity can be used productively.
Value that does not fit neatly in the formula
Some benefits matter even when they are difficult to price: faster customer response, better auditability, less dependency on one employee, and more predictable delivery. Keep them visible, but do not turn every soft benefit into an invented financial number.
- Capacity for customers and decisions.
- Faster work without routine waiting.
- Fewer avoidable correction loops.
- Clearer status, exceptions, and ownership.
Risk-adjust the business case
Create conservative, expected, and optimistic scenarios. Vary the volume, time saved, error reduction, implementation cost, and adoption rate. If the project only works in the optimistic case, reconsider the scope or solution.
When a positive ROI is still not enough
- The process depends on a system that will soon be replaced.
- The calculation assumes payroll cuts when the real benefit is service capacity.
- Sensitive data has no clear security owner.
- Nobody can maintain the change or respond when an integration fails.
- The affected team has not agreed to adopt the new workflow.