The technology project ROI offers tremendous leverage in establishing a business case to justify technology initiatives. However, you cannot fully evaluate the probability of financial gain or loss with any investment unless you first understand how to calculate the return.
To make the most of your ROI estimation, and convince leadership or key stakeholders that you have the right calculation backed with real data, it may be best to consider hiring business technology consultants. If external IT services or outsourcing is not in the budget, analytics software will not only help you monitor your project in the long run, but it will also enable you to create professional IT dashboards displaying all your information at once; an efficient overview busy executives desperately need.
The Increase Decrease Method
To properly calculate the technology project ROI, you first need to identify the areas to incrementally increase and how much you expect to generate from each area. You must also identify the areas to decrease or eliminate entirely. Assess the likelihood of either occurrence in each area and determine how much you can deviate from expected costs and benefits without losing money.
- Increase revenue: What steps can the company take to sell more? An example of this would be implementing a new client portal that enables customers to purchase specialty products and services not offered through general means. Perhaps a membership is required to access the portal. Another example of using business technology to increase revenue would be obtaining a new compliance mandate that opens up new sales opportunities.
- Decrease costs: What steps can be taken for the company to spend less money? One example of this would be consolidating your technology (lowering hardware and software costs). Another example would be automating workforce labor using robotic process automation (RPA).
- Increase productivity: A technology initiative could increase the capacity of the staff and systems so your company can do more with less. CRM/call center integration that streamlines customer care is one example of how to achieve this. Investing in a business intelligence solution that provides the right data/analytics needed to make better decisions is another example.
- Decrease risk: What steps can be taken to minimize known risks that can negatively impact the company? One example would be taking the necessary step toward improving cybersecurity, which may also lower costs by resulting in lower insurance premiums. A secondary example, but no less beneficial, would be improvements to system redundancy to decrease downtime.
Why Understanding ROI Is Important
Knowing the technology project ROI helps you determine whether it is worth the investment of time and money. You want to know if you are wasting resources on technology that isn’t doing much for you both at the time of purchase and in the long run. For example, migrating from on-premise Exchange or SharePoint software to MS Office 365 will likely save a lot of upfront costs for new hardware and licensing. However, there will still be an upfront cost to migration, as well as ongoing costs and subscription fees. When calculating ROI, always be sure to consider the following:
- Upfront costs
- Ongoing costs
- Time and labor
Looking at past investment choices and performing an ROI analysis helps you assess, adjust accordingly and make better cost projections in the future.
Reinforce Your In-House Expertise
Do you feel like technology is an expense that drags you down? Worried that you may be investing in the wrong things at the wrong time? Business leaders can sometimes feel caught in a whirlwind of technology. Chasing after change is frustrating and can negatively affect your growth and ultimately your ROI.
Working with a consultant to clarify a technology strategy provides a rudder to navigate shifting winds. With the right technology, your business can stay on top of budgeting concerns while meeting critical goals. At Afidence, we’ve been serving clients in the Dayton and Cincinnati areas since 2010 with our proven process for on-time and on-budget delivery.
Contact us today for unbiased advice that can help you calculate technology project ROI for the advancement of your business.