Thinking Through ATS ROI

If you’re thinking about buying a new Applicant Tracking System, you’re probably building a business case in order to get the budget you need.

In my mind, there are a few big buckets of value you can get from a new ATS:

  • Increasing recruiter productivity
  • Changes in your hiring funnel
  • Decreasing time to fill

While there are definitely other considerations when building your ROI model, and there are certain ATS’s that have specific features that can drive measurable value from sourcing, etc…these three really take the cake.

Calculating the Value

The hard part of any ROI analysis is actually building out the model that will get you to a dollars and cents value you can reasonably spend on a new initiative. This is what the CFO wants to see, and the assumptions in our model can illuminate the potential weaknesses and opportunities in the new project.

While it’s not perfect, I put together a short model for your ATS business case. Feel free to play around with it and modify the assumptions to fit your business. Here’s a quick video overview on how to use the spreadsheet.

Time To Fill – Driving Most of the Value

It was surprising to me that the VAST majority of value from a new ATS comes from decreasing time to fill. After talking to a few friends on the ATS vendor side of things, it turns out that this is the most common ROI story their reps tell.

Here’s why it makes sense: imagine you have a sales person that does $1 mm in revenues per year. That’s $4k per day in revenues. Each day you don’t have the sales person, you lose $4k! Imagine if you hire 10 of those per year, and you decrease your time to fill on each req by just one day…that’s $40k!

Of course, that $1 mm/yr sales person is an outlier in terms of the magnitude and measurability of their contribution to the business. But, each person in your company is at least adding value equal to their salary each day (or else they wouldn’t have a job!), and probably more like 3x their salary. You can probably do some quick math to realize there is tremendous savings in decreasing time to fill, especially if you’re hiring >50 people each year.

Let me know in the comments what you think of this ROI analysis and how you’ve thought about your business case. Also, buying a new ATS isn’t just about building an ROI case. You have to know which are the best vendors, what questions to ask them on demos, etc when buying a new ATS.

One Last Note On ROI Models

I alluded to this earlier, but it’s worth noting that ROI models can be really interesting to look back on 6-24 months after your project has kicked off. What did you under or over estimate? Why? What can you learn? And, most importantly, what was the actual ROI of your project?

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