IT Return on Investment (ROI): A Practical Guide for Business Users - Part Four

Part Four: ROI Approach

Timeframe
The required timeframe is estimated not only by the overall time needed for the project but also by how much time you are willing to commit to the actual analysis.

Do you have a crystal ball?
Most often, the original intent for conducting the analysis is to give you the needed information to make a future investment.  In terms of a content management example, estimates of annual support and maintenance payments are likely to be used.  Intrinsic in assumptions made are unknown factors that may be outside of your control.  In the annual support and maintenance example, an assumption of a 20% annual payment becomes skewed if the software manufacturer institutes a change.  In this example, an external factor may increase the payment to 22% annually which could have a significant impact on the projected costs and payback period.

Retrospective study
The implementation of content management should be considered a process and not a project, and as such, independent results can be expected when reviewing actual cost and benefit data.  “Pilot” projects provide the needed information for the retrospective ROI approach.  A recommended best practice is to review and perform a per project analysis each time the content management tool is leveraged.  Once document management functionality has been instituted in one department, the incremental expense to enable additional departments will be nominal as initial start-up costs like hardware infrastructure, System Administrator training, etc. are “sunk” at that point.

See Part Three here

See Part Two here

See Part One here