How to calculate the Time to Value for WFM software implementation?

Feb 28, 2023

When you are writing a business case to justify implementing a workforce management system, there is a lot you need to consider. We have also written an article (including a template) on how to write a business case which includes broader considerations than just the ROI. 

However, one area often overlooked when writing a business case is the time it takes to see any benefits from the project. This is called Time to Value for WFM software implementation and is the moment when the project breaks even and starts making a profit.

We have written an article on how to calculate the ROI, which involves comparing the costs and benefits.

Time to Value helps your finance director understand how long it takes to pay back the initial investment. In a very simple example, if the total costs to implement the solution are £100k and the benefits are delivered instantly, and they equate to £10k per month, then the time to value is ten months. Of course, the benefits aren’t delivered in an instant; they increase as the implementation progresses and as more employees start to use the system. Likewise, costs aren’t spent in an instant and vary over the length of the project.

Time to Value for a WFM software implementation

In this article, we help you understand how to do a Time to Value for WFM software calculation and also how to improve it.

If you are writing a business case to justify the implementation of workforce management software, we recommend that you include a calculation of the Time to Value.

What is the definition of Time to Value?

Time to Value for WFM software implementation is the time taken to see a net cumulative benefit on a project. If you think of it as a profit and loss statement for the project, Time to Value is when the project breaks even and starts making a profit.

Why is Time to Value important?

It tells the finance director how long a project takes to pay back the initial investment and when to stop budgeting for costs and start budgeting for benefits. In many businesses, the annual budget process is a tough time, with departments looking for savings and revenue growth in the next year. If you have accurately forecasted the Time to Value, you can budget accurately for the benefits. If you are late delivering the benefits, you will likely miss your budget in some way.

How do I calculate the Time to Value?

Although the concept of working out how long before a project makes a profit is quite simple, calculating it is surprisingly hard. It will need a spreadsheet and is similar to creating a business plan and profit and loss for the project. You will need to estimate quite a few variables, and if you get these wrong, your Time to Value calculation will be wrong. These include:

  • The benefits delivered every month as the project progresses
  • The monthly cost as the project progresses
  • How much of the benefits will be delivered per department or location during the early stages
  • How long will it take to implement and rollout
  • How long before a pilot is considered a success
  • How long decision-making and sign off will take after a pilot

As you can see, these are all variables, and they are unique to every business. Although we have created an ROI calculator template which we make available for free, calculating Time to Value for WFM software implementation doesn’t lend itself to a template. However, our implementation managers and sales consultants will happily help you build a model based on their experience.

How to calculate time to value?

What benefits do I take into consideration when calculating Time to Value for WFM software?

The benefits are identical to the ones you need to take into consideration when calculating an ROI. However, when looking at an ROI, we look at the end result and take the costs and benefits over the life of the project. With Time to Value for WFM software project, we are looking to calculate the benefits every month at the start of the project until the cumulative benefits exceed the cumulative costs on a monthly basis. The benefits you will need to calculate are:

  • Reduction in costs
  • Increase in revenue
  • Reduction in risk

What costs do I take into consideration when calculating Time to Value?

As mentioned above, we need to calculate the cumulative costs on a monthly basis. These will include:

  • Software vendors up front and implementation costs
  • The costs of a pilot
  • Your organisation’s costs for both the implementation and the pilot
  • The software vendor’s costs per month up until the moment the project breaks even
  • Your organisation’s costs per month up until the moment the project breaks even
  • Third-party costs, such as consultants
  • Any costs in the locations using the software, such as the manager’s time and hardware installation

How do I interpret a Time to Value?

The quicker, the better, with anything less than a year being able to impact the next budget period. Typically we see Time to Value for WFM software project being between 6 months and a year if the client is committed to delivering the value as quickly as possible.

How can I improve the Time to Value of my WFM project?

We have seen many workforce management implementations and have seen how the Time to Value can drag out. In our experience, this is often more with the customer than the software vendor.

  • Track the Time to Value: Organisations that include Time to Value in their business case and then track it throughout the project are more likely to make the right decisions and apply pressure to hit the target. 
  • Reduce the upfront cost: Pretty obvious point, but the lower they are, the quicker you can pay them back.
  • Take all of the benefits of the system from day 1: We often see companies implement a basic version of the workforce management software, for example, without taking the AI-driven automated scheduling software until a later phase. This will reduce the benefit from revenue growth and therefore increase the Time to Value.
  • Implement quicker: We often see companies take a break between the pilot and the rollout; this can be to ensure the whole organisation has bought into the project or to wait for another project to finish, such as a payroll implementation. This entire delay is added to the Time to Value.
  • Reduce the ongoing operational costs: Often overlooked are the costs during the rollout, whether that is a vendor cost, internal cost or a third party. These need to be deducted from the benefits each month, and they increase the Time to Value. So reducing these costs will help you hit your target.
  • Manage the implementation well: Most organisations won’t roll out until the pilot is complete, requiring a well-run implementation project. If there are unforeseen delays, it will hit your Time to Value. We have written an article on the top ten biggest issues and how to address them here.
How to improve the time to value

What does a software vendor think of when you mention Time to Value?

It is worth noting that Time to Value is an often-used phrase and KPI for software vendors. They have sales and marketing costs and often don’t make money from implementation. They often charge per person or per venue, so until you have fully rolled out the solution, they don’t see the full revenue. Just like you, the software vendor will work out an ROI and a Time to Value, but theirs is based on when THEY move from break-even to profit, and the money they are charging you exceeds their investment in the project so far. It is a good thing that your vendor thinks this way, because they are focused on getting you up and running as quickly as possible.

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