Calculating the ROI of a Power Platform investment
One of the biggest challenges in securing budget for Power Platform projects is substantiating the business case. Decision-makers want to see concrete numbers: what does it cost, what does it deliver, and when is the investment recouped? In this article, we share a practical framework you can use to calculate the ROI of a Power Platform investment.
Measuring direct cost savings
The most tangible benefits of Power Platform are direct cost savings through automation. Start by identifying processes that are currently performed manually. Measure the time employees spend on these tasks and calculate the costs based on the average hourly rate. A simple example: if five employees each spend two hours per week on manual data entry, and the hourly rate including overhead is 50 euros, the annual costs are 26,000 euros.
With Power Automate, you can fully automate many of these tasks. If the automation eliminates 80% of the manual time, you save over 20,000 euros per year on this single process. Multiply this by all the processes you automate and the savings add up quickly.
License costs and implementation
On the cost side, you need to account for license costs, implementation costs, and management costs. Power Platform licenses start at relatively low amounts per user per month. Implementation costs vary depending on complexity, but for a typical SME project, these range between 10,000 and 50,000 euros. Management costs are typically 15-20% of implementation costs per year.
Quantifying indirect benefits
In addition to direct savings, there are indirect benefits that are harder to quantify but at least as valuable. Think of improved customer satisfaction through faster response times, fewer errors through automated data validation, better decision-making through real-time Power BI dashboards, and greater employee satisfaction by eliminating boring, repetitive work.
Try to quantify these benefits where possible. If faster quotes lead to 5% more won deals, calculate the additional revenue. If fewer errors lead to a 10% decrease in complaint costs, quantify that amount. Even conservative estimates make the business case more convincing.
Organizations that implement Power Platform see an average ROI of 200-400% over three years. The key is not only automating existing processes but unlocking possibilities that were previously unthinkable.
The ROI framework in practice
Use the following formula as a starting point: ROI = ((total benefits - total costs) / total costs) x 100%. Calculate total benefits over three years, including direct savings, revenue growth, and indirect benefits. Subtract the total costs: licenses, implementation, training, and management. In a typical Power Platform project, we see that the investment is recouped within 6 to 18 months.
Make the calculation concrete with scenario analyses: a conservative, realistic, and optimistic scenario. This gives decision-makers a nuanced picture of expected returns and associated risks.
Presenting the business case
A strong business case combines hard numbers with a compelling story. Start with the problem you are solving, present the calculated ROI, and support this with references from similar organizations. At Breathbase, we help clients prepare substantiated business cases that convince even the most skeptical CFO. Contact us for a no-obligation ROI calculation for your specific situation.
