ROI vs benefits: how to measure your business’s IT success

ROI vs benefits: how to measure your business’s IT success

The right IT projects can provide significant benefits to a business; however, they can also pose a significant cost to a business, so it is essential to measure the return of the investment. Return on Investment, or ROI, evaluates the financial return of an investment relative to the cost of the investment.

ROI = (return – cost of investment) / cost of investment

It’s a quick and easy way to show the financial return, but this should not be mistaken for demonstrating the benefits of a project. ROI is a widely used method of justifying IT investments. While it can certainly show you the financial impacts of a project, it does not take into account the wider consideration of other tangible and intangible benefits, nor does it ensure that the project aligns to the organisation’s strategic goals.

It’s easy to see that implementing a document management system (such as SharePoint Online with custom workflows) will save a certain number of hours per headcount at an organisation. You can calculate how many hours of saved staff time will result in the project investment being recouped, but you may still miss the more important benefits of this project such as:

  • Improved qualityof documents by tracking the updates and approvals;
  • Staff moraleimprovements by utilising an easy to use system;
  • Increased customer satisfaction because you can quickly share or publish documents to clients or partners (this could potentially result in increased revenue);
  • Improved collaboration between teams; and
  • Ability to access all content on a mobile device anywhere.

Not only is it important to evaluate wider benefits in justifying an expense, it’s also important to fully harness the delivered benefits. Measuring delivered benefits is important to ensure the new purchase is achieving its potential and the business is recouping all the value it can. Benefits may arise at different intervals – repeated daily or weekly tasks, end-of-month processes or quarterly financial statements – and the value will vary per person across the organisation.

Benefits realisation is achieved by tracking the delivered benefits against the proposed benefits. Benefits should list the following criteria:

  • Description;
  • Financial or non-financial classification;
  • Alignment to organisational goals or strategies;
  • Owner, or primary beneficiary, of the benefit;
  • Timeframe of benefit being realised;
  • A baseline value and target value tomonitor; and
  • Benefit calculation method – this could be things like tracking how many staff access the system remotely, or a decline in meetings because online collaboration has improved.

Measuring and quantifying the return on your IT investments is paramount in ensuring that your money and time invested are justified and that your business is procuring the maximum benefit.

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