WPR-HCM-ROI

8/19/2019 WPR-HCM-ROI

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Ramco HCM & Talent Mangement

The Return on Investment ( ROI)



Importance of Software Testing and Defect Analysis

Disclaimer

Ramco Human Capital Management (HCM)

The Return on Investment (ROI ) numbers shown are indicative only.

The ownership (of the implementation and results) is both ways – Ramco and Customer.

The product is in use as per Ramco’s recommendations (communicated through a training program)and a mutually agreed configuration process.

The customer signs an AMC.

If the starting point was a standard or partially standard implementation, the customer undertakesto improve the application’s fit to their business through Ramco recommended service offerings.

The customer undertakes to carry out anonymous surveys to measure user satisfaction and sharesthese results transparently with Ramco.

The results of the survey must be discussed with Ramco, and a mutually agreeable plan to improvethe situation can be agreed upon.

The improvement plan may involve commercials.

Retention or performance improvement ROI might require specialty consulting services.

Ramco Human Capital Management (HCM) is a part of Ramco ERP, a comprehensive ERP on Cloud application.

Used by Fortune 500 and mid-sized organizations alike, this application covers every aspect of the Human

Resource management function, such as:

In order to achieve the indicative ROI, it is suggested that every aspect of Ramco HCM product is made use of

in the best manner. Ramco HCM is designed to automate HR processes end-to-end. Each of the components

present in the Ramco HCM suite talk to each other, thereby addressing the issues faced by organizations in

respect to redundancy, latency, bottlenecks and data exceptions.

Comprehensive coverage of the HR function

Streamlining processes (provides for uniformity across the organization)

Implementing best practices (in various HR functions)

Reducing labor (by eliminating repetitive tasks and automating processes), and reducing cycletime

Improving information visibility (and ease of information assemblage)




The figure below shows the Ramco HCM product guide.

In framing this paper on ROI, the following assumptions are made:

Ramco VirtualWorks® Platform

Advanced Planning& Optimization

SOA Integration/Collaboration

RAMCO HUMAN CAPITAL MANAGEMENT

Training Administration

TrainingFeedback

TrainingRequests

Multi-CountryPayroll*

CountrySpecific*

TerminationBenefits

Request forHire

PerspectivesModel

TalentScorecard

Secondary Assignments

Rewards

BehavioralModel

9 Box

Performance Appraisal

Job Advertising

Certification

CompetenciesModel

Recruitment

LeaveManagement

Travel &Expenses

TimeManagement

EmployeeMovements

EmployeeRecords

Health &Medical

OrganizationLayout

RecruitmentEmployee

DevelopmentPayroll &Benefits

WorkforceManagement

DeviceIntegration

eSignatureExtension Toolkit Analytics

Enterprise Add-ons

Mobility

TalentManagement

ResumeUpload

Shortlist

Recruitment Administration

Onboard

Internal Hires

SuccessionsPlans

Career Plans

WorkforcePlanning

Planning

Advanced Reporting Wizard Interface Embedded Workflow Data Uploads

Framing the ROI

The benefits that accrue from implementing Ramco HCM must be carefully considered in any

implementation and compared with the costs. The costs associated with implementing the system

(including hardware and other internal costs) are approximately USD 100,000.




The benefits and thus ROI may be calculated as follows:

1. The examples taken below are only a sampling of the real ROI that is possible. It is intended to encourage

the organization using the software to achieve the necessary ROI, calculated over a 12-month period (payback).

2. The size of the organization is 300 – 900 employees ( 300 assumed for all calculations below).

(Further reference Annexure A: is an example taken for calculation purpose)

3. The implementation is to be centralized.

4. The organization is currently using a combination of manual systems, desktop databases, and desktop

productivity tools to maintain its HR data.

5. In order to compute Full Time Equivalents (FTEs), it is assumed that an employee works for eight hours

a day, five days a week or 160 hours in a month. That is a total of 1920 hours in a year. So if it takes 30

minutes to complete a task, and annually this task is to be done 1000 times, then the total time taken

would be 30,000 minutes or 500 hours/year. Thus, FTE for this task would be 500 hours over 1920 or

0.26 of an employee’s time (the one who is doing the task).

6. The average compensation for HR/IT staff is USD 24,000 annually.

7. The average compensation for managers is USD 40,000 annually.

8. HR gets an average of six queries in a day, on issues such as pay, leave, funds, loans etc. that they must

process using the tools described in assumption number 3.

9. Recruitment cost per employee is USD 500 (including consultant’s cost, travel, advertisements,

courtesies, overheads etc.)

10. The average employee turnover is 7% (typical manufacturing environment).

11. About 5% of the employees are transferred or promoted.

12. The annual training cost per employee (assumed as 1% of annual compensation) is USD 240 (training

material, instructors, copyrights, etc), for staff and USD 400 for managers.

13. The learning cost of an employee is the time taken by the employee to bust the learning curve, after

training. It usually takes two months for any employee to settle into an organization or new position. Thus

when employees are encouraged to stay on, there is a savings associated with such retention. When

they are promoted, the savings may come from their familiarity with the business.

14. The organization processes 10,000 applications for administrative processes (such as leave, claims etc)

in a year, involving 30 minutes of manager time per application, 21 minutes of support personnel time

(from HR, Systems, & Finance), and one systems staff (either IT or manual). Thus, the manager’s time is

300,000 minutes (5,000 hours) and support personnel time is 210,000 minutes (3,500Hours). This is the

time needed to collate/parse/validate data on the application and to communicate the decisions. TheFTEs of these are 2.6 for managers and 1.8 for support personnel. To service these calls, 50,000

telephone calls are made @ USD 0.15 /call (average).




Comprehensivefeatures. Forillustration of theROI, let us takefeatures designedfor employeeretention.

Employee retention is a taskthat HR Managers worryabout on a day to day basis.Ramco HCM caters 100%to the needs of employees,keeping them motivated. Assess employee mindshare with the organization’sapproach to business cultureand their performance. The

winners (both culturally andperformance-wise) are theones that the organizationshould worry about retaining.

Needs Compensation: Theproduct addresses all humanneeds as explained byMaslow’s Hierarchy.

Physiological – Payroll,Benefits etc.Safety – Use internationalOSHA features.Hygiene – Create teams toaddress grievances and

undertake disciplinary actionwhere needed.Esteem & Self Actualization–UseEvents Management to createinterest groups.Self-Appraisal—Understandemployees’ self-esteem andgoals.Mind share and Performance:

Use the potential appraisalfeature to assess employee’smind share with organizationand then performance appraisal to judge performance.Best Practices: Pay for skills or performance or both.

Even if the organizationcan reduce the turn over by1%, i.e. it retains 3employees, then the savings accrued are:Cost of recruitment for 3positions: 3 * USD 500 =USD 1500 (assumption # 9)Cost of Training for 3positions: 3 * USD 240 =

720 (assumption # 12)Cost of learning on the job:3 * 2 months * staff salaryfor two months = 12,000(assumption # 13). Thus the value will be the sum of thethree.

14,220

Benefit Stream Description Features ROI Calculation Value(inUSD)

15. The organization hires 30 new recruits, and collating the data needed for the process of fixing

compensation, takes 30 minutes per recruit. The organization handles 30 other cases of promotion /

transfers etc. and spends similar energy in the process. The FTE of this activity is 60 transactions * 30

minutes/transaction = 1800 minutes or an FTE of 0.93.

16. Average time in setting up monthly payroll is 6 person days or 40 hours. In a year, it is done 12 times or

4800 hours. The FTE is 2.5.

17. The organization requires a total of 30 key HR Reports (in reality, the number will cross 100 over time) on

issues such as vacancy, payroll anomalies, statutory, career movement. They will require these reports

at least 5 times in a year, thus totaling 150 discrete report-building activities. Each of these activities will

involve at least two people working for 8 hours. Thus, the efforts for 150 reports would be 150 * 8 hours

* 2 persons = 2400 hours or an FTE of 1.25

18. The costs taken for ROI are reflective of those experienced in the developing world.

The Benefits:

The broad benefits have been outlined above. In order to quantify these benefits, we need to identify the metrics

of the process involved. Metrics include the number of people involved, cycle time, number of systems (both

manual and automated) etc.




Reducing labor/ cycle time: Example inPayroll

When a Payroll administratoruses a low end applicationfor processing Payroll, he isforced to make manualcalculations for most of theelements in Payroll.

Payroll is a one-time set up(done at implementation).

(Assumption #16)The FTE of 2.5 is completelycut, thus savings =2.5 * 12,000 = 30,000

30,000

Information Assemblage:Example ofReport Building

The organization may have tocollate data from multiplesources to produce reports.This may have to be doneevery time the report isasked for, as current datamust be presented in thereport.

The product comes with over200 MIS reports and views. Additional reports may be builtwith the report writer that comesfor free with the ERP.

(Assumption #17)The FTE of 1.25 iscompletely cut. Thus thesavings are 1.25 * 24,000 = 30,000

Total savings

30,000

159,920

USD

Streamliningprocesses: Usingadministrativeprocesses as anexample.

All administrative processesare totally web enabled,obviating the need for paperflow and the use oftelephone/fax.

Use Employee Self Service toget answers to queries onyour Payroll, Leave Balances,and Reimbursements etc. Apply for leave acrosslocations and explain why you

need the time off, all throughthe intranet. Approvals aregiven through the intranet itself.

(Assumption #14)It will be possible to reduceone support person (1 FTE)– savings of USD 24,000and half a manager (0.5 FTE) – USD 20,000. (half the

annual salary). Phone callsmay be reduced by 60% -0.6*50,000*0.15 = USD4,500

48,500

Implementing abest practice: An example inrecruitment /transfers /promotions

Fixing the salary for a newhire/promotion/transfermeans the following datawill be needed. The currentsalary of the new hire,salaries paid to similarpositions within the

organization and in theindustry. Referring to such adatabase is termed as a“best practice”.

This information is availablewith the touch of a button,(assuming the product isimplemented in full).

(Assumption #15)The FTE of 0.93 iscompletely cut. Thus, thesavings accrued is0.93*40,000 (salary of themanager) = 37,200 37,200

These savings of USD 159,920 (only from those benefit streams mentioned above) must be compared with the

total cost of the project of USD 100,000 (which is inclusive of hardware and other components). The payback for

the software will happen in less than a year! This is apart from the benefits of a transparent HR system, improved

employee motivation and productivity.

Annexure A: ROI Calculation for Ramco HCM Implementation (full suite)




Basic Assumptons

Total Hours (year) 1920(8 hrs/day* 5

day/week*4*12)

CTC / Employee (USD) 24,000

ROI from Report Generaton

Report NameTime to generate

report (mins)Number of Times

(generated in a year)FTE Equivalent Cost Saving (USD)

Report #1 120 500 0.52 12500.00

Report #2 120 500 0.52 12500.00

ROI from ESS (Access to informaton only)

Employee Inquiry Time to answer (mins)Number of Times

(asked in a year)FTE Equivalent Cost Saving (USD)

Leave, Claims,

Personal Informaton30 7200 1.88 45000.00

Employee Leers 30 2400 0.63 15000.00

ROI from Data Entry Tasks (Employees use ESS afer product implementaton)

ActvityTime to complete

Actvity (mins)

Number of Times

(asked in a year)FTE Equivalent Cost Saving (USD)

Leave Applicatons 7 10000 0.61 14583.33

Leave Encashment 5 2000 0.09 2083.33

Claim Applicatons 10 10000 0.87 20833.33

Personal Informaton

Changes10 2000 0.17 4166.67

Resume (Entry) 30 5000 1.30 31250.00

Resume Short List 120 200 0.21 5000.00

Employee On

boarding30 1000 0.26 6250.00

Flexi benefit

Enrolment45 2000 0.78 18750.00

Aendance Entry 10 360 0.03 750.00

Employee Self Review 30 2000 0.52 12500.00

Employee Training

Request10 24000 2.08 50000.00

Employee query 5 24000 1.04 25000.00

Employee Leer

Request10 12000 1.04 25000.00

Time Sheets 5 60000 2.60 62500.00

ROI from Improved Employee Retenton

Target Area Target (%) Acquisiton Cost (USD) Renewal Cost (USD) Cost Saving (USD)

Retenton 1.00% 24000 2000 26000.00

TOTAL SAVINGS 3839666.67 USD

ERP | SCM | HCM | EAM | CRM | Financials | APS | Process Control | Analytics | Aviation | BFSI | Energy & Utilities | Government | Logistics | Manufacturing | Services

c Copyright 2013, Ramco Systems Limited. All rights reserved.

Disclaimer: Information subject to change Ramco disclaims any and all warranties including without limitation any warranties concerning the availability quality accuracy or content of information in the brochure

For more information, you can e-mail us at [email protected] or visit us at www.ramco.com

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WPR-HCM-ROI