How to Calculate ROI for Change Management

Digital transformation is critical for businesses, and it’s happening at a rate that’s faster than most people expected. 

For some, this acceleration has come at a price — like failed projects — because change management wasn’t part of their overall strategy and individual projects. 

To get the executive team to understand the importance of change management, you need to show the return on investment (ROI). 

Let’s take a look at how you can calculate ROI for change management.

Understanding the Ecommerce ROI Equation

You need to understand the benefits of implementing your new commerce technology compared to the cost of implementing that technology. 

The Ecommerce ROI Equation

To get started, let’s look at the typical approach to determining ROI, according to Calculator.net:

ROI = (Benefits of the Project - Project Costs) ÷ Project Costs

Hidden in this simple calculation is the ROI of change management itself. You need a way to show leadership the impact of not dealing with change management proactively.

Learn From the Past

Think back to your past projects that lacked a change management plan. What worked and what didn’t?

For example, if the project was implementing a new software solution that 50% of your employees switched to, how well did the transition go? How quickly or easily did your employees adopt the new system? 

These experiences may sound familiar to you: 

• Some employees didn’t understand why they had to change systems and balked at using it.
• Other employees couldn’t figure out how to use the new system, and it took them a long time to adjust or feel comfortable using it. 

You can determine the ROI of change management with a little bit of reflection. 

The Importance of Usage and Adoption

Usage and adoption are fundamental to digital transformation projects, especially projects that involve software that your employees use.

This is the case with digital commerce software. Employees use it daily to perform their jobs, whether creating product content, connecting and publishing content to different places on the digital shelf, or measuring your commerce program's performance.

The ROI of Change Management

To understand how to calculate the ROI of change management, you have to tweak the original ROI calculation, notes Prosci. 

Think about the benefits of implementing your new digital commerce technology. Some benefits are dependent on adoption, others are independent. 

For example, implementing a new payments system isn’t dependent on user adoption — it’s an underlying part of the commerce architecture that employees don’t see or directly use. 

Update Your Project Experience Management System

However, a new product experience management system that changes the way your team creates and manages content, and publishes content to digital channels, is dependent on employee adoption. 

It’s these dependent benefits you want to look at, including things such as:

• Improving content development productivity;
• Reducing errors in delivering content to a channel; and 
• Providing channel performance data in real-time.

For benefits dependent on adoption and usage, ask yourself what the benefit would be in dollars if adoption and usage were zero? 

If no one wanted to use your new product experience management system, or if it took them forever to figure out how to use it efficiently, your benefits would be much smaller than you expected. 

The ROI of Change Management Equation

To determine the ROI of change management (CMROI), you would include activities like regular communications and training that helps get employee buy-in from the start: 

CMROI = Expected Benefits - Expected Benefits if adoption and usage = 0 ÷ Expected Benefits

Considerations

Before you show this calculation to your executive team, you need to keep a few things in mind. 

First, it’s essential that any technology you implement is the right technology, and it’s deployed correctly. If it’s not, there are a whole slew of potential challenges that could arise, some affecting employees directly. 

Second, change management comes with its own set of costs that you need to identify and tie into your planning. 

You need to account for: 

• Change management resources;
• Communication costs;
• Training costs; and
• Any travel costs associated with workshops, town halls, and other activities related to your change management strategy. 

So, when you look at the ROI of change management, you also look at the cost of implementing your change management plan to achieve that ROI.

Change Management Is Critical to Digital Transformation

The benefits of implementing a change management program as part of your digital transformation projects are clear. 

Effective and proactive change management minimizes resistance to change and helps increase awareness of the need to change, as well as increases adoption and usage of the new technology. 

The value of change management is critical to digital transformation, and well quantified when advocating for it using ROI.

Download this change management guide to get a step-by-step walkthrough of building an effective change management strategy for digital transformation in commerce.