The True TCO & ROI of EPM Projects

Under-scoping cost

Ignoring integrations, internal resourcing, and post-go-live maintenance.

Over-stating benefit

Valuing every hour saved at a fully loaded salary rate — with no adoption risk discount.

Ignoring timing

Failing to model ramp-up, change management, and partial year impact.

🕒 1. Efficiency Gains — Doing the same work faster

• Reduce manual close, consolidation, and forecast cycles
• Automate data collection, validation, and report refresh

📊 2. Accuracy & Control — Doing the work better

• Eliminate spreadsheet risk and version confusion
• Improve audit trail and confidence in numbers
• Reduce financial restatements or forecast rework

🧠 3. Decision Agility — Doing smarter work

• Faster scenario analysis and sensitivity testing
• Rolling forecasts vs. static budgets

💵 4. Strategic Impact — Doing more valuable work

• Better resource allocation = margin uplift
• Headcount optimization through visibility, not cuts
• Improved working-capital forecasting

Step 1 – Define Baseline KPIs

Before kickoff, document measurable pain points: Days to close, Forecast cycle time, Manual FTE hours per cycle, Reforecast frequency, % of time spent on data prep vs. analysis

Step 2 – Translate Hours → Dollars

Use blended hourly rates per role (Finance, IT, Analysts). Apply an adoption factor (typically 60–80%) to reflect real utilization.

Step 3 – Estimate Strategic Leverage

Quantify the benefit of improved decisions using ranges, not guesses: 0.5–1% of revenue improvement in resource allocation, 1–2 day cash-flow acceleration via faster close, 1% working-capital benefit from improved forecasting.

Step 4 – Apply Timing & Ramp-up

Year 1: 50% of benefit (ramp-up, training). Year 2+: 100% as adoption stabilizes. Include recurring admin cost (1 FTE ≈ $150K/year).

Step 5 – Run ROI Math

ROI = (Cumulative Net Benefit (3 years) / Total TCO (3 years)) × 100. Typical results: Conservative ROI: 150–250% in 3 years, Aggressive ROI: 400–600% with enterprise scale, Payback window: 12–24 months depending on scope and adoption.

Executive Summary

One-page summary highlighting ROI, payback period, and key business drivers. Include current pain points and proposed solution benefits.

Current State Analysis

Document existing processes, pain points, costs, and risks. Include close cycle time, forecast accuracy, manual effort, and system limitations.

Proposed Solution

Describe EPM platform capabilities, implementation approach, and expected outcomes. Align with business objectives and strategic initiatives.

Financial Analysis

Present TCO breakdown, ROI calculation, payback analysis, and 3-year financial projections. Include sensitivity analysis for key assumptions.

Risk Assessment

Identify implementation risks, mitigation strategies, and contingency plans. Include change management and adoption considerations.

Implementation Plan

Outline project timeline, resource requirements, milestones, and success metrics. Include governance structure and decision points.

❌ Focusing Only on Software Costs

✅ Solution: Include implementation, training, change management, and ongoing support costs in TCO analysis.

❌ Ignoring Process Efficiency Gains

✅ Solution: Quantify time savings from faster close cycles, automated reporting, and streamlined workflows.

❌ Underestimating Strategic Value

✅ Solution: Value improved forecast accuracy, better decision-making, and reduced financial risk.

❌ Using Unrealistic Assumptions

✅ Solution: Base calculations on industry benchmarks and conservative estimates. Include sensitivity analysis.

❌ Not Accounting for Change Management

✅ Solution: Include costs and benefits of user adoption, training, and organizational change.

❌ Ignoring Ongoing Costs

✅ Solution: Factor in annual licensing, support, maintenance, and enhancement costs over the full lifecycle.

📊 Financial Metrics

• Actual vs. projected cost savings
• Close cycle time reduction
• Forecast accuracy improvement
• Manual effort reduction
• Audit preparation time savings

⚡ Process Metrics

• User adoption rates
• System utilization
• Process efficiency gains
• Error reduction rates
• Decision-making speed

🎯 Strategic Metrics

• Forecast accuracy vs. targets
• Risk reduction measures
• Compliance improvements
• Stakeholder satisfaction
• Business agility gains