EHS software systems can pay for themselves in under a year by reducing operational risk and optimizing performance. Companies that use EHS software enjoy lower operating costs and fewer unwanted events, and employees who use software are more productive and efficient.
When is it time to invest in EHS software?
Today’s organizations are juggling more information than ever before, and traditional EHS management systems are inadequate for handling these high volumes of data. Spreadsheets or outdated technology systems complicate collaboration with wide groups of users across the enterprise. And, as organizations widen their data collection efforts and reporting to include other non-EHS entities of the company, these old methods become problematic.
Compliance experts estimate that 80% of enterprises use spreadsheets to support critical business functions. Spreadsheets are powerful and effective in small groups, but quickly break down when collaboration is needed across the company. According to a recent study, 88% of spreadsheets have errors . These errors are caused by disparate data collection efforts, re-keying of data and complex data input screens only a few experts really understand.
If your company has more than 10 employees managing EHS information, it's time to consider a more modern and efficient system. That said, corporations of any size can realize value that justifies the investment.
What is the value of a modern EHS software system?
A modern EHS software system can significantly improve productivity, remote work and collaboration, and management visibility to mitigate costly risks. The latest systems are more standard, easier to implement and use, and — contrary to what some people may think — more affordable.
Using EHS software will redefine efficiency standards for your enterprise. The centralization of knowledge, more accurate data, and enhanced management visibility will significantly reduce risk and incident occurrences, while also reducing costs.
Most Perillon customers see payback on their investment within one year, and the ROI is typically greater than 5X the cost of the software. In other words, EHS software returns about $5 for every $1 spent.
How to build a business justification
Investing in EHS software should be a straightforward, low-risk management decision. Most often, a business justification is necessary to demonstrate why the purchase is needed and how it will benefit the organization.
There are three elements to a winning business justification. First, define the problem by clearly breaking down your organization’s issues into work activities and risks. Second, quantify productivity savings by work activity, including data dependencies from other organizations outside of EHS. Finally, quantify the return on investment into business terms that your CFO will relate to and expect. Show how the system will pay for itself. Be prepared to answer the questions, “why now?” and “what strategic activities will my EHS group focus on with our freed up time?”.
Elements of a business justification
- Define the problem. What are the most time-consuming tasks your team (including consultants) performs each week, and what are the productivity issues? What are the biggest risks facing your organization?
- Quantify the problem. How much time are employees spending on these tasks? How many major/minor incidents occur each year? What are the costs (medical, legal, reporting time) associated with these incidents?
- Define the process improvement opportunities. Think about the daily activities your core EHS team spends time on. What areas could be improved by automation? Break these down by focus area -- for example, environmental reporting, audits & inspections, incident management, training management, management reporting, etc.
- Describe how EHS software can address the problem. For example, describe how mobile capabilities can involve more employees in inputting data at the source, in real time, for better accuracy and no lost data. Share case studies of how other companies are using this solution to their advantage.
- Discuss why you've selected the proposed software. For example, if your company is already using another software, explain why you are changing to another solution. If you considered custom software, explain that a standard-based commercial system is easier to implement and offers a lower cost of ownership over a 3-year period.
- Calculate the costs associated with new software. Consider the estimated cost of the software + implementation services fees over a 3-year period. Factor in employee time for the implementation period of performance, training time, and learning the system. How long is the payback period? How soon will the company see a return on investment?
- Define the risk or opportunity loss of doing nothing. What risks is your organization exposing itself to if you don't purchase EHS software? What are the potential costs of major/minor incidents that could be avoided by implementing new software? What are the potential losses in productivity?
- Calculate the potential savings. Quantify potential time savings by each activity/process improvement defined in #2. Identify a percentage saved for each activity, and the resulting number of hours saved.
- Define the business impacts of those savings. What would employees do with the free time you calculated in #8? Make a list of strategic, value-add activities that have a direct impact on reducing corporate risks. For example, your employees could spend their newfound time implementing an ISO 14001 environmental management system, improving employee training programs, etc.
- Consider non-financial benefits, too. Include any non-financial benefits that can be tied to a business goal. For example, morale improvements can help achieve the company's goal of recruiting and retaining staff.
Examples & success stories
Especially if you're new to creating a business justification, it can be helpful to look at examples from other companies. As we mentioned above, you might also choose to include data and success stories from companies like yours who've implemented EHS software successfully. Below, you'll find a sample business case along with links to case studies from Perillon customers.
Example business case for an EHS management system
In the following business case, you'll see an example of the estimated savings potential for a centralized EHS software system. Click here to schedule a free custom ROI assessment and discover your biggest time and cost savings opportunities.
Want to take this with you? Click here to download the example business case for reference.
Next, download case studies showing Perillon's impact:
Find out how Denbury freed up 50% of their HSE team's time with Perillon.
Learn how National Grid streamlined assessments for a wide range of environmental programs with Perillon.
See how Allete reduced administrative and travel time by standardizing their audits and inspections with Perillon.
In this guide, you've seen how to determine whether you're ready to invest in EHS software and the benefits of doing so. You've seen the steps to creating a business justification. And you've seen examples of business justifications that you can use as a model for your own.
Next, download our free business justification checklist to help get approval for the tools your team needs.
Or, if you would like some help developing a business justification for your technology initiative, request a free tailored ROI assessment.