Calculating the ROI of an Electronic Laboratory Notebook

Business Tips for Scientists, ELN

Lab Directors need to calculate ROI to justify an electronic laboratory notebook purchase
Building the business case can be the most challenging aspect of implementing an ELN.
Image Source: National Cancer Institute via Wikimedia Commons.

If laboratory directors were given a poll asking what the most difficult part of the electronic laboratory notebook (ELN) selection process was, my bet is that most would identify “building the business case” as the hardest step in the process.  It is not because that they don’t recognize the importance or need for an ELN or even because they don’t like writing business cases. It is because the business case must convince business managers of the need and importance of an ELN.

Business managers can be a difficult audience to address regarding ELN adoption, because most view any software purchase as an investment. This view allows them to develop financial expectations regarding the deployment of the ELN. Most will understand and accept that an ELN can improve the quality of research and internal efficiencies related to laboratory workflow. They just would like to understand this in relation to what it will cost to obtain.

Because business managers view software purchase this way, ELN implementations, like any software purchase, needs to be measured in terms of return on investment (ROI).  ROI is a simple financial calculation used to measure the profitability or efficiency of an investment. It is calculated by the following formula:

(Gain on Investment – Cost of Investment) / Cost of Investment = Return on Investment

The result of the equation is a percentage that shows the profitability or return from an investment. If it is positive, the project is pursued. Projects with negative ROI are usually not pursued.

To build the business case, most laboratory directors will need to understand both the costs and gains from an ELN. Most laboratory directors can quickly identify the costs associated with an ELN investment, usually including hardware and software costs, system configuration, instrument interfaces and user training.

However, the other part of the equation, the “Gain on Investment,” is not as straightforward. It requires some judgment in relation to how the type and quantity of savings that will occur. To help laboratory directors who may be stuck on this calculation, below is a short list of areas where savings gains could occur by implementing an ELN:

  • Efficiency Savings – The primary reason that most laboratories implement an ELN is because it will make them more efficient. This efficiency includes an increase in the number of experiments conducted each month/year, as well as a reduction in manual tasks currently performed by scientists, like cutting and pasting results into a paper notebook. When quantifying the gains, laboratory directors will want to focus on the financial benefits associated with completing more experiments each month/year.
  • Rework Experiments – The sad truth is that with paper notebooks, sometimes it is easier to re-perform an experiment than to search back through the notes to find the results. However, ELNs reduce the occurrence of reworked experiments, because the original results can be easily retrieved through a search of the database. Laboratory directors will want to focus on the possible gains from eliminating rework.
  • Decommissioned Systems – Another financial gain that laboratory directors will want to consider is the gain from eliminating other systems when implementing an ELN. This might include databases that were used to store and track large data files that could not be stored in a paper notebook.

For the business case, success occurs when expenses are minimized and gains are maximized. This will lead to a favorable ROI and approval from the financial team. Although business cases may not be fun, they are a necessary part of the ELN selection process. Ensure that your business case demonstrates the true potential of an ELN by focusing on the potential gains as well as the possible expenses.

For more information regarding the BIOVIA Notebook and how it can help your company, please visit our website today.

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