Skill Management: Check the ROI Yourself

What ROI actually means

ROI is one of the numbers that decides whether software gets approved. It is also the number that vendor material fudges most. So here is the formula first, so you can check our arithmetic.

ROI is the gain relative to the outlay, not the return relative to the outlay: ROI = (return minus cost) divided by cost. On €250,000 of return and €24,000 of cost that is 942 percent, not 1,041 percent. The difference looks small, but it is the difference between a yield and a ratio. We had the wrong version on this page ourselves for years.

One more thing about magnitude. A good ROI for enterprise software sits in the low double digits in the literature. If somebody shows you four-digit percentages, they are almost always counting items no accountant will ever see. That is why the calculator above shows an amount in euros and not a percentage.

The one question every ROI case hangs on

Is there an invoice that stops being written?

It sounds banal, but it sorts every item instantly. Anyone assessing HR software gets served three kinds of return, and they are not worth the same.

First: a cost disappears

The recruiter sends one invoice fewer. The training budget goes into courses somebody actually needs instead of the ones on offer this quarter. A tool gets switched off. That ends up in the accounts, and your finance team can find it again.

Second: working time is freed up

Nobody gets paid less, so no euro leaves the building. But the hours are countable, and whoever spends them today can name them. That is a good argument inside the department.

Third: a percentage on the payroll

Three percent more productivity on nine million in staff cost is €270,000. Arithmetically correct, worthless in an approval. The same salaries get paid as before. This is exactly where the CFO gets off, and rightly so.

Where the three percent come from: Gallup measures a productivity difference of 14 to 18 percent between the top and the bottom quartile (Q12 meta-analysis, 11th edition 2024, page 5). What is measured there is employee engagement, not a tool like ours. Three percent is therefore a cautious assumption and not a measured effect.

Productivity is not worthless, it needs one more step

A productivity gain is real. It only turns into money once you say what happens to the freed-up capacity. There are exactly two routes: you do not backfill a role, or you deliver more and sell it. If neither happens, the gain stays in the building and nobody can book it.

So we do not ask about percentages, we ask about the step after: how many open roles could you fill internally if you could finally see who can do what? You know that number, and a real invoice hangs off it, namely the external search that does not happen.

The benefit items one by one

Productivity is the item from the two sections above. These are the other five.

Lower turnover

Skill management gives people a visible path forward. Someone who can see which skills take them to the next role leaves less often. This is the strongest item, because the counter-invoice already exists: search fees, adverts, onboarding, the gap until the role is filled.

The base underneath it is hard, though: your leavers from last year and your real replacement costs. Set the value to five percent if you want to be cautious.

Training budget

Without an overview of the skills you already have, training gets booked from a catalogue instead of from need. Two departments buy the same course, and the colleague who already knows the subject never gets asked. Where knowledge moves internally, the need for bought-in courses falls. Here too the invoice already exists today.

Tools you can drop

Skill matrices live in spreadsheets, on shared drives and sometimes in a second tool that does this one job only. Where Teammeter takes that over, the licence for it stops. This is the smallest item on the list and the easiest to verify, because you can look up what you pay for it.

Filling roles internally

The item from the section above. A role filled internally saves the external search.

Risk and proof obligations

In regulated areas, qualifications and certificates have to be demonstrably current. If proof lapses unnoticed, the worst case costs a fine or a contract. This item is the least transferable of them all, which is why it sits as optional and with a placeholder for you to replace. If it applies to you, you know your own magnitude better than we do.

What it costs, in full

An ROI case that only shows the return is an advert. So the costs are here in full. The calculator carries three of them, and for integration there is deliberately no number.

• Licence. Skill management starts at €3.50 per person per month and costs more at small headcounts. The calculator takes the tier that matches your headcount. From 2,000 employees the price is by agreement.
• Integration. There are ready-made connectors for your HR system, your sign-in and your learning platform, but the configuration is still work. It depends on your system landscape, so there is no number for it in the calculator.
• Onboarding. Onboarding is included in the enterprise package, along with videos and documentation. There is no setup fee.
• Upkeep in the tool. Skill management does not maintain itself. Everyone keeps their own profile current, teams keep their requirements current, and the catalogue needs somebody to run it. The calculator subtracts this as a cost, at half an hour per person per month. At 100 employees that is around €21,000 a year, the largest cost block of them all.

What you do with it

Take the line without productivity into your approval, not the total. The calculator shows it separately. Set the assumptions cautiously enough that you can defend them in the room, even when somebody digs. A smaller number that holds gets you further than a big one that falls apart on the first recalculation.