Testing ROI Model

(Ref Id: 1406566089)

ELN and the Paperless Lab discusses, among other topics, the return on investment in implementing an ELN.

I had a free minute so I figured I would use it to follow this article's model for calculating the cost and producing the ROI for an ELN implementation. My guess is that this would be useful for a LIMS implementation as well.

Key

Software licensing cost (per user) = SLC
Number of Users = Users
Per License Support cost (percentage) = SUPPC
Validation Staff Hourly Rate = VALH
Average Time to Validate Item = AVGVAL
System Function = FUNC
Implementation Consultant = IC
Implemenation Consultant Hourly Rate = ICR
Laboratory Analyst Hourly Rate = LARATE
Implementation Window (in hours per quarter) = IMPQ
Average Time to Log in a Sample Manually = TLS
Average Time to Log in a Sample Manually in LIMS = TLSR
Average Samples Logged in Per Day = SAMPDAY

Licensing

So for basic licensing costs if I have:

SLC = $1,000 per seat
Users = 50
SUPPC = 25% of the per seat cost

Licensing Cost = SLC*Users+(SLC*SUPPC)

Example: $1000*50+($1000*50*0.25) = $62,500

Validation

For validation costs if
Users = 4
VALH = $25.50
AVGVAL = 1/2 hour
FUNC = 80 items

Ballpark Validation Cost = 4*VALH*AVGVAL*FUNC

Example: 4*$23.50*0.5*80 = $4,080

Hardware

Assuming here that everybody already has client machines to run the software and all that is needed is a server to host the application:

Server = $5,000
Routers = $800

Example Total hardware cost = $5,800

Implementation

Assuming we are using two implementation consultants that will be responsible for end user and IT staff training as well as integrating the system with 3rd party systems (only out-of-the-box integration tools are assumed),

IC = 2
ICR = $100/hr
IMPQ = 480

Example:
IC*ICR*IMPQ = $96,000

Grand Total

$168,380.00

Looks like a lot, but none of this actually computes ROI. ROI stands for Return on Investment. You should be able to ascertain how long it will take you to obtain that return. In order to understand that we actually need to take a look at how must things are presently costing the lab:

TLS = 1 hour
SAMPDAY = 20
LARATE = $50/hr

Daily Cost to Log In Samples/Orders Manually = LARATE*TLS*SAMPDAY = $1000/day

Weekly Cost (assuming 5 day work week) = $1000*5 = $5,000

Monthly = $5,000*4 = $20,000

Yearly = $20,000*12 = $240,000

Now with the LIMS:

TLSR = 0.10 hour
SAMPDAY = 20
LARATE = $50/hr

Daily Cost to Log in Samples/Orders in the ELN/LIMS = LARATE*TLSR*SAMPDAY = $100

Weekly Cost = $100*5 = $500

Monthly = $500*4 = $2,000

Yearly = $2,000*12 = $24,000

Hmmm, this is good news for LIMS/ELN implementations that are relatively small. As you can see, it costs ten times as much to continue manually logging in samples/orders into this environment. Even if we spend $168,000 to implement a system that just logs in samples it will apparently pay for itself in a single year.

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Citation: Testing ROI Model. (2014). Retrieved Thu Apr 19 15:11:39 2018, from http://www.limsexpert.com/cgi-bin/bixchange/bixchange.cgi?pom=limsexpert3;iid=readMore;go=1406566089