Ramco HCM & Talent Mangement

The Return on Investment ( ROI)

Importance of Software Testing and Defect Analysis

Disclaimer
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 Ramcos 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 undertakes
to improve the applications fit to their business through Ramco recommended service offerings.
The customer undertakes to carry out anonymous surveys to measure user satisfaction and shares
these results transparently with Ramco.
The results of the survey must be discussed with Ramco, and a mutually agreeable plan to improve
the 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)

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:
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 cycle
time
Improving information visibility (and ease of information assemblage)

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.

Importance of Software Testing and Defect Analysis

The figure below shows the Ramco HCM product guide.

RAMCO HUMAN CAPITAL MANAGEMENT

Workforce
Management

Recruitment

Talent
Management

Employee
Development

Payroll &
Benefits

Planning

Organization
Layout

Request for
Hire

Job Advertising

Competencies
Model

Health &
Medical

Workforce
Planning

Employee
Records

Resume
Upload

Internal Hires

Certification

Recruitment

Career Plans

Employee
Movements

Shortlist

Performance
Appraisal

Training
Requests

Termination
Benefits

Successions
Plans

Time
Management

Recruitment
Administration

9 Box

Training
Administration

Country
Specific*

Leave
Management

Onboard

Behavioral
Model

Training
Feedback

Multi-Country
Payroll*

Perspectives
Model

Secondary
Assignments

Talent
Scorecard

Rewards

Travel &
Expenses

Advanced Reporting

Wizard Interface

Embedded Workflow

Data Uploads

Enterprise Add-ons
Analytics

Mobility

Extension Toolkit

eSignature

Device
Integration

SOA Integration/
Collaboration

Advanced Planning
& Optimization

Ramco VirtualWorks Platform

Framing the ROI

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

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.

Importance of Software Testing and Defect Analysis

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 employees 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 consultants 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 managers 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. The
FTEs 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).

Importance of Software Testing and Defect Analysis

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.

Benefit Stream

Description

Features

Comprehensive
features. For
illustration of the
ROI, let us take
features designed
for employee
retention.

Employee retention is a task

that HR Managers worry
about on a day to day basis.
Ramco HCM caters 100%
to the needs of employees,
keeping them motivated.
Assess employee mind
share with the organizations
approach to business culture
and their performance. The
winners (both culturally and
performance-wise) are the
ones that the organization
should worry about retaining.

Needs Compensation: The

product addresses all human
needs as explained by
Maslows Hierarchy.
Physiological Payroll,
Benefits etc.
Safety Use international
OSHA features.
Hygiene Create teams to
address grievances and
undertake disciplinary action
where needed.
Esteem & Self ActualizationUse
Events Management to create
interest groups.
Self-AppraisalUnderstand
employees self-esteem and
goals.
Mind share and Performance:
Use the potential appraisal
feature to assess employees
mind share with organization
and then performance appraisal
to judge performance.
Best Practices: Pay for skills or
performance or both.

ROI Calculation

Even if the organization

can reduce the turn over by
1%, i.e. it retains 3
employees, then the savings
accrued are:
Cost of recruitment for 3
positions: 3 * USD 500 =
USD 1500 (assumption # 9)
Cost of Training for 3
positions: 3 * USD 240 =
720 (assumption # 12)
Cost of learning on the job:
3 * 2 months * staff salary
for two months = 12,000
(assumption # 13). Thus the
value will be the sum of the
three.

Value
(inUSD)

14,220

Importance of Software Testing and Defect Analysis

Streamlining
processes: Using
administrative
processes as an
example.

All administrative processes

are totally web enabled,
obviating the need for paper
flow and the use of
telephone/fax.

Use Employee Self Service to

get answers to queries on
your Payroll, Leave Balances,
and Reimbursements etc.
Apply for leave across
locations and explain why you
need the time off, all through
the intranet. Approvals are
given through the intranet itself.

(Assumption #14)
It will be possible to reduce
one support person (1 FTE)
savings of USD 24,000
and half a manager (0.5 FTE)
USD 20,000. (half the
annual salary). Phone calls
may be reduced by 60% 0.6*50,000*0.15 = USD
4,500

(Assumption #15)
The FTE of 0.93 is
completely cut. Thus, the
savings accrued is
0.93*40,000 (salary of the
manager) = 37,200

48,500

Implementing a
best practice:
An example in
recruitment /
transfers /
promotions

Fixing the salary for a new

hire/promotion/transfer
means the following data
will be needed. The current
salary of the new hire,
salaries paid to similar
positions within the
organization and in the
industry. Referring to such a
database is termed as a
best practice.

This information is available

with the touch of a button,
(assuming the product is
implemented in full).

Reducing labor/
cycle time:
Example in
Payroll

When a Payroll administrator

uses a low end application
for processing Payroll, he is
forced to make manual
calculations for most of the
elements in Payroll.

Payroll is a one-time set up

(done at implementation).

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

Information
Assemblage:
Example of
Report Building

The organization may have to

collate data from multiple
sources to produce reports.
This may have to be done
every time the report is
asked for, as current data
must be presented in the
report.

The product comes with over

200 MIS reports and views.
Additional reports may be built
with the report writer that comes
for free with the ERP.

(Assumption #17)
The FTE of 1.25 is
completely cut. Thus the
savings are 1.25 * 24,000
= 30,000

Total savings

37,200

30,000

159,920
USD

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)

Importance of Software Testing and Defect Analysis

Basic Assumptions
Total Hours (year)

1920

CTC / Employee (USD)

24,000

(8 hrs/day* 5
day/week*4*12)
ROI from Report Generation

Report Name

Time 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 information only)

Employee Inquiry

Time to answer (mins)

Number of Times
(asked in a year)

FTE Equivalent

Cost Saving (USD)

Leave, Claims,
Personal Information

30

7200

1.88

45000.00

Employee Letters

30

2400

0.63

15000.00

ROI from Data Entry Tasks (Employees use ESS after product implementation)
Activity

Time to complete
Activity (mins)

Number of Times
(asked in a year)

FTE Equivalent

Cost Saving (USD)

Leave Applications

10000

0.61

14583.33

Leave Encashment

2000

0.09

2083.33

Claim Applications

10

10000

0.87

20833.33

Personal Information
Changes

10

2000

0.17

4166.67

Resume (Entry)

30

5000

1.30

31250.00

Resume Short List

120

200

0.21

5000.00

30

1000

0.26

6250.00

45

2000

0.78

18750.00

Attendance Entry

10

360

0.03

750.00

Employee Self Review

30

2000

0.52

12500.00

Employee Training
Request

10

24000

2.08

50000.00

Employee query

24000

1.04

25000.00

Employee Letter
Request

10

12000

1.04

25000.00

Time Sheets

60000

2.60

62500.00

Employee On
boarding
Flexi benet
Enrolment

ROI from Improved Employee Retention

Target Area

Target (%)

Acquisition Cost (USD)

Renewal Cost (USD)

Cost Saving (USD)

Retention

1.00%

24000

2000

26000.00

TOTAL SAVINGS

3839666.67 USD

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

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