Many organisations who may be in the early stages of starting up their business are constantly trying to effectively manage their financial resources or cashflow and try to save money whilst they build income. So as an example, when an organisation starts out, they may consider building a website. These days there are so many DIY sites to help you build your own website, so smaller organisations might consider using these sites to build the website internally. This option might take more time, but it won’t require any major outlay of cash, which is a scarce and valuable resource in those early days. So, in order to “save money”, they may choose to build the website themselves, however, in doing so, the end product may be far less superior than if a professional web developer built the site.
In this example, these organisations are thinking about their website all wrong. They view it as a business requirement, and therefore, as an expense. Purely as an outlay of cash, rather than thinking about it as an investment and considering how the website can be a positive contributor to their business’s growth – a return or business opportunity.
This example is analogous to the decision many organisations face regarding outcomes measurement software. To make this clear, let’s define what we mean by an investment and an expense.
For an investment, you put money into a project with the hope, and in most cases the understanding, that it will return more benefit than what you put into it. The initial cash outlay is a stepping stone to a larger return. In the case of a website, an organisation should view it as something that would yield future benefit so that the cost of the website (the investment) is negligible. Investments have the potential for future growth and advantage.
An expense is an outlay of resources that doesn’t provide any return. In the example of the website, an organisation may feel like they want to save their financial resources and build the site themselves because they can’t afford the cash outlay. They don’t see the website returning anything in the future, thus they are viewing it as an expense, like buying pens for the office. So expenses have no potential for growth. They may be an essential component of doing business, but don’t offer anything beyond the initial outlay of resources. Once it’s spent, it never returns.
So how does this apply to your decisions regarding an outcomes measurement software?
Just like a website, an Outcomes Measurement software system is also an investment. Although it is easy to think about this software as another business expense, it isn’t just a tool for doing business. Outcomes Measurement software has advantages and benefits, including:
- Reducing time spent on tasks (an expense),
- Increasing potential to deliver more services (increase income), and
- Help you benchmark performance and work to improve performance (reduce expenses and increase income).
These advantages and benefits essentially reduce your expenses and increase your income, thereby growing the capacity of your organisation beyond the cash outlay you make in the software itself. When used effectively, the software provides a return. So although in pure terms it is a financial outlay, it is ultimately an investment in your organisation’s future capacity to make a bigger impact on your community and thus, not a short term unrecoverable expense. Therefore, thinking about an Outcomes Measurement solution in this way might help you make a wise strategic decision!
If you would like more information on ways to measure Return on Investment for your Outcomes Measurement software, see our blog.