If you’re running your organisation effectively and managing budgets efficiently this is a question you will no doubt ask whenever you get some marketing information about the latest techonolgy development or you get a call from your IT account manager. If you don’t ask this question AND find an answer how can you make an informed decision about how to spend your organisation’s hard earned money???

Maybe you allow yourself to be persuaded by the sales pitch. If this is a good one, they will listen to you and then explain how the product will benefit your organisation. How often does a sales pitch focus on ROI? Does anything else matter? If you’re a charity, a school or another organisation where you do not have to make money then you may well have a focus other than ROI. But if you run a business how can you spend money on anything that isn’t going to do one of the following;
1. Improve your bottom line (make money)?
2. Improve your top line (reduce costs)?
3. Improve efficiencies (increase how hard your money works for you)?
4. Avoid potential future costs (protect against potentially damaging incidents - eg data loss)
5. Improve cashflow?
These are reasonably tangible, but there are other factors that could affect the ROI;
6. Will the technology give you an edge over your competitors and allow you to potentially increase market share?
7. Will the technology improve the quality of what you do and/or the quality of the customer service you provide?
8. Will the technology allow you to market your products more effectively?
These are not always measurable factors, but they can be very real and should form part of any ROI calculation. The problem is; what value do you assign to the factors?
There may also be factors that are specific to your industry or even to your organisation.

You will also need to decide the lifespan of the equipment. Is it 3 years? If so, you should look at the impact of all the factors over this period against your initial cost and ongoing costs.

As this question is unwrapped, you can start to see how complex finding an answer actualy is.

How important is it to you that your IT supplier helps you understand the ROI you can expect from the investment they are aksing you to make?
In what format would you want to see this?
Should it be part of the proposal stage so you can see the investment required compared to the expected ROI before you make a financial commitment. Or should it be even earlier than this and be part of the initial discussion? Do you need a proposal if you are not convinced there is a real potential of getting a significant ROI?

Is ROI actually as important as we think it is or are we barking up the wrong tree?