Most SAM practitioners will find Return on Investment (ROI) as a concept when researching how to build a case for ITAM (IT asset management).
Many articles state that the ROI of ServiceNow software asset management is calculated based on the potential return on investment (ROI). It is associated with achieving or reconstructing the service.
What is Return on Investment?
Return on Investment (ROI) estimates an investment's financial profit against its cost. Simply put, it is the calculation organisations usually use to help them decide whether to invest.
The formula for calculating ROI is to deduct the cost of the investment from the revenues produced by the investment and divide that result by the investment cost to obtain a percentage.
ROI in Software Asset Management
Smart modern software foundation & elegant integration between work orders and asset management are required to achieve meaningful ROI in software asset management.
ServiceNow software asset management's main benefit is reducing IT costs and risks and enhancing help status. These benefits are not revenues in themselves. One challenge that practitioners face in calculating the ROI of their ServiceNow SAM programme is converting these benefits into cash sums.
Based on the saying "a penny saved is a penny earned," the reduction in IT costs achieved by ServiceNow SAM is added to the revenue side of the equation. Cost reduction refers to lowering known current expenses (such as a bulk discount for hardware).
At the same time, cost prevention means avoiding potential future costs (e.g., reusing a harvested software license). These cost-saving options may be estimated and accounted for in calculating the revenue component.
Read on to learn about ServiceNow SAM Solutions – Is Your Company in Need of It?
Calculating the ‘Cost of Investment’
The salary of the ITAM team members is the most evident expense. That may seem simple, but there are several other costs to consider. This includes taxes, insurance, pensions, and for illness. Most HR departments have a system that enables them to ascertain the actual cost of employees rather than relying solely on "headline" remuneration.
Another consideration is the price of your discovery, metering, licence tools, etc. This cost is somewhat apparent if you use standalone tools. Also, you should consult with your infrastructure department to ensure that your account for the cost of ongoing support ( deploying upgrades).
If you choose integrated service management product that also does tasks like patch management. Then, it would be best to discuss with the vendor what portion of the total cost is attributable to the ServiceNow SAM components. Also, make sure you know the costs associated with supporting the infrastructure and account for a portion of those charges. This will help your infrastructure area with the calculations.
Calculating the ROI for a SAM programme is more art than science. The final figure will depend on your assumptions when converting the non-fiscal costs and benefits into figures to enter the equation. We should not forget that the costs and benefits of our program only appear over time. Thus, we must discount future cash flows to the present value and include them in the ROI calculation.
Positive Return on Investment with Integrated Solutions
Asset management that is skilfully integrated with work order management and provider management can certainly get us a positive ROI. A consumer's ROI can be as extreme as 325% or even higher when they switch from spreadsheets and emails or significantly out-of-date answers.
It's possible to achieve 250%+ ROI for customers who have not implemented much system growth but expect to integrate future generations of asset management.
What Key Software Attributes Drive the ROI of Software Asset Management?
- Smart preventative maintenance programs
- Intelligent automation and integration of work orders & asset data for asset repair work
- Efficient and effective warranty management
- Prioritise continuous improvements through reporting and dashboards
By integrating with work order management and prioritizing continuous improvements, a ROI of 250% or more can be achieved. While calculating ROI may seem like an art, it can be accomplished by considering the costs of investment, including salaries and tool costs, and the potential revenues from investment, such as cost reduction and avoidance.
To achieve meaningful ROI, organizations must prioritize smart preventative maintenance programs, intelligent automation and integration of work orders and asset data, efficient warranty management, and continuous improvements through reporting and dashboards.
Learn more about how ServiceNow software asset management can benefit your organization.