Are you currently on the hunt for a new technology platform to better engage your field crews, collect data and/or mobilize processes? Take a few minutes to review or learn some best practices for calculating return on investment (or ROI)!
Savvy solar logistics and operations managers know that each initiative they take on requires consideration of upfront and indirect costs, as well as projected savings. However, it is human nature to judge the worth of a solution by its price tag even though it does not always correlate with whether you are getting the most value out of your solar software.
While it does take longer to go “beyond the sticker” and consider other factors (such as the platform’s ROI, pricing model and any associated ongoing costs), it is certain to result in a much more realistic and dependable selection process.
In this article, we will explain the kind of preparation that needs to be done before measuring the ROI of solar field software solutions before diving into some calculation tips to get you started.
When it comes to measuring ROI, you are essentially comparing the size of savings or benefits to the cost of the given solution. Before breaking out the spreadsheet, it is worthwhile to go through some qualitative analysis and gather the base data on both the savings and costs sides of the ROI equation.
Start by identifying and estimating the financial impact of the challenges that you are trying to solve in your particular business. Here are some steps to follow:
When you’re trying to estimate the true price-tag of the solution, it’s important to consider the following aspects:
Once you have done the above brainstorming and fact-finding, you’re ready to dive into the ROI calculations. As a place to start, we’ve provided some categories below in expandable boxes that you you to follow below. Keep in mind that these are just starting points meant to stimulate more discussion and thinking within your team.
In this section, we break down the key savings and cost categories that you need to include in the ROI evaluation of any field engagement tool.
Field work is undoubtedly a major part of what a solar company does, and many key personnel spend more time out on site visits or traveling than they do in the office. For a field engagement tool, a key indication of savings is whether the platform minimizes friction between the office and field.SAMPLE CALCULATION:
Savings = hours saved per instance of the process * number instances per employee * average hourly rate of employees involved * and number of employees impacted
Reporting is a large part of managing your clients. Documenting data, formatting reports and communicating work completed to each customer takes time. If your software can help reduce the amount of resources spent per client on customer reporting, then you will have the bandwidth to service more clients with the same level of quality.SAMPLE CALCULATION:
Savings = hours of manual steps saved * number of reports * hourly rate * % of personnel considered high value / experts
Your software should be working for you to reduce overhead and take out manual labour that could be automated. By reducing administrative tasks like manual data entry and the unnecessary routine of printing, revising and distributing information via paper and email, you could significantly reduce your overhead and ensure your resources are concentrated into operations.SAMPLE CALCULATION FOR LABOUR:
Savings = difference in # of clerks required * clerks' wages & benefitsSAMPLE CALCULATION FOR RESOURCES:
Savings = savings in eliminating paper form revision and redistribution
Based on historical and projected sales and servicing data, you can plan and budget for the number of truck rolls, percentage of downtime, etc. in a quarter. However, even with contingencies in place, many solar contractors often end up with unexpected costs. This could include unproductively idle workers as a result of poor equipment scheduling, or having to pay for costly extra truck-rolls to collect data forgotten the first time around.SAMPLE CALCULATION FOR DOWNTIME:
Savings = hours of downtime saved * cost per hour * number of critical issues causing downtimeSAMPLE CALCULATION FOR TRUCK-ROLLS:
Savings = number of trips saved per personnel * cost per trip * number of field personnel
This is the most obvious and easily understood cost category as it is the price tag that you pay for a given solar software solution. As previously mentioned, these can vary based on the platform's pricing model but we have laid out sample calculations for two types below.SAMPLE CALCULATION:
If Per User, cost = subscription cost per month * number of expected active users, rounded up
If Per Usage, cost = subscription cost * number of expected transactions, rounded up + 5% contingency
Although it is difficult to generalize a formula for calculating these, the following are important points to keep in mind:
The 80-20 Rule: In most cases, users get 80% or more of the value from 20% or less of the features. Find a platform that is really good at delivering the key features that you really need, instead of focusing on rare exceptions that overcomplicate the platform.
As mentioned earlier, ROI is essentially a division of total savings or benefits by the total solution costs. This number is often presented as a multiple.
As a rule of thumb, a solution needs to produce at least 10X ROI (i.e., where savings are 10 times larger than the costs) to be worth the implementation risk. Discuss with your senior management to understand your company’s level of risk tolerance and refine the figure as needed.
Although the calculations can be tedious, performing this due diligence will help you become more confident in the solutions that you vet and ultimately enable you to present the best solution to your executive team. Remember, even if the cost of a solution seems absurd as first, figuring out its true ROI for your solar company could make the greatest difference!
Scoop® Solar is a unique solution that incorporates mobile and cloud technology to create an intuitive field-to-office experience for your team. By connecting your data and existing software with easy-to-build, easy-to-use work apps™, your team can access, input and sync data from a mobile phone or desktop, wherever they are. Work smarter and lower your overhead with features such as standardized mobile-optimized forms, fully integrated pictures and videos, one-click reporting, built-in API integrations and more. Learn more about our made-for-solar solutions here.