How to Calculate ROI for Software. Without Fake Math

Custom software pays off when it changes how work happens. The fastest way to lie to yourself is to calculate ROI using hopes, not behaviors.

A responsible ROI model stays simple, measurable, and tied to actual workflows. It also respects speed. Value that arrives sooner is worth more than value that arrives later.

The 3-Bucket Benefit Model

Use three buckets. Most real ROI fits here.

1) Cost Reduction

Direct savings from fewer hours, fewer mistakes, fewer external fees.

Examples:

• Reducing manual data entry
• Cutting rework caused by errors
• Lowering support calls and escalations

If you have your salary number nearby, the math is relatively simple: (Average salary of employees x Number of employees who no longer have to do it) x Percent of workload devoted to manual task

2) Capacity Creation

Not layoffs. Throughput. The same team handles more work without burning out.

Examples:

• Faster quote-to-order
• Shorter onboarding steps
• Automation that removes bottlenecks

3) Cash Acceleration

Money arrives sooner, or revenue leaks stop.

Examples:

• Faster invoicing
• Fewer stalled approvals
• Better follow-up that reduces lost deals

The C.R.A.F.T. ROI Check

Run every ROI claim through C.R.A.F.T., the ROI checklist:

• C . Concrete: A number tied to a real step in a real workflow
• R . Responsible: Includes effort, training, and adoption time
• A . Auditable: Someone can verify the input numbers
• F . Focused: Based on the top 1 to 3 workflows, not everything
• T . Timed: Value is measured by month 1, month 3, and month 12

Mini Case Study. Manufacturing Scheduling Upgrade

Problem: A manufacturing company had long lead times because scheduling lived in spreadsheets and email. Jobs were re-planned daily, and mistakes caused missed shipments.

Mistake: The first ROI estimate assumed a large headcount reduction. That created internal fear and resistance, and it ignored the real goal, which was shipping reliability.

Fix: The ROI was rewritten using the 3 buckets.

• Cost Reduction: fewer expediting fees and fewer remakes
• Capacity Creation: schedulers handled more work with less chaos
• Cash Acceleration: faster invoicing after on-time shipments increased

The project shipped in controlled phases, with weekly releases and tight feedback. That speed created momentum, and craftsmanship kept changes stable.

Result: On-time shipments improved, expediting costs dropped, and the team’s daily schedule planning time was cut enough to free capacity for growth.

Quick Takeaways

• Real ROI comes from changed workflows, not features.
• Use 3 buckets: Cost Reduction, Capacity Creation, Cash Acceleration.
• Apply C.R.A.F.T. so ROI stays honest and measurable.
• Measure value early, not only at the end of the year.

Putting this to work: Pick one workflow and measure its current time, error rate, and delay cost before scoping software.