Enhancing Return On Investment

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Enhancing Return On Investment

  1. 1. Enhancing Return On <br />Investment<br />Akash Dolas<br />
  2. 2. By Akash Dolas<br /> Quality Manager - Cybage<br />email: akash.dolas@gmail.com<br /> LinkedIn: www.linkedin.com/pub/akash-dolas-pmp-lion/7/70a/b <br /> Twitter: @akashdolas<br />
  3. 3. Focus of This Discussion<br /><ul><li>What is ROI?
  4. 4. Tactical ROI
  5. 5. ROI for a single initiative or application
  6. 6. Identification of sources of Return
  7. 7. Examination of task cost savings on a per-transaction basis
  8. 8. Emotions and Financial Cycle</li></li></ul><li>What is ROI?<br /> Quantifiable profits set against investment<br />
  9. 9. Some ROI Comparison Methods<br /><ul><li>Return as a percentage of Investment over a fixed period</li></ul>(Return / Investment) x 100<br /><ul><li>Return after deducting Investment for a fixed period</li></ul>(Return - Investment)<br /><ul><li>How long until Return equals Investment</li></ul>(Investment / Return per week)<br />
  10. 10. Identifying Costs (Investment)<br />
  11. 11. Identifying Costs (Investment)<br />
  12. 12. Identifying Sources of Return <br /><ul><li>Savings through shorter task time
  13. 13. Savings through shorter processing time
  14. 14. Savings through the prevention of “leakage”</li></li></ul><li>A Method for Identifying Savings<br /><ul><li>Observe old process
  15. 15. Observe new process
  16. 16. Make sure to include all phases of both methods
  17. 17. Measure process times for both
  18. 18. Check for any statistical differences in outcome
  19. 19. Measure frequency of task
  20. 20. Understand fully loaded employee cost per hour</li></li></ul><li>Old Conference Room Application<br />
  21. 21. Web Conference Room Application<br />
  22. 22. Costs and Savings<br /><ul><li>Costs</li></ul> 3 days to develop interface<br /> 24 hrs x $40 =$960<br /><ul><li>Savings</li></ul> Each reservation took 10 minutes less<br /> 4560 non-recurring reservations first year<br /> 760 hrs x $40 = $30,400<br />
  23. 23. ROI Calculations:<br />ROI Calculations<br /><ul><li>Return as a percentage of Investment over a fixed period:</li></ul> (Return / Investment) x 100<br />($ 30,400 / $ 960) x 100 = 3167%<br /><ul><li>Return after deducting Investment for a fixed period:</li></ul> Return - Investment<br /> $ 30,400 - $ 960 = $ 29,440<br /><ul><li>How long until Return equals Investment:</li></ul> Investment / Return per week<br /> $960 / $585 = 1.6 weeks<br />
  24. 24. Business Card Request<br />
  25. 25. Identifying sources of return<br /><ul><li>Costs</li></ul>5 days to develop application and web interface<br /> 40 hrs x $40 = $1600<br /><ul><li>Savings</li></ul> Each order took 10 minutes less time for routing and processing.<br /> One third of orders involved about 6 minutes for searching, questions, and re-submission of forms.<br /> 743 Orders first year of application.<br /> 148 hrs x $40 = $5920.<br />
  26. 26. ROI Calculations<br /><ul><li>Return as a percentage of Investment over a fixed period:</li></ul>(Return / Investment) x 100<br /> ($5920 / $1600) x 100 = 370%<br /><ul><li>Return after deducting Investment for a fixed period:</li></ul> Return - Investment<br /> $5920 - $1600 = $4320<br /><ul><li>How long until Return equals Investment:</li></ul> Investment / Return per week<br /> $1600 / $114 = 14 weeks<br />
  27. 27. Computer Crimes are vulnerable<br />New Business Card Request<br />
  28. 28. Vacation Request<br />
  29. 29. Identifying sources of return<br /><ul><li>Old process was to send e-mail to department admin, who forwarded to payroll after approval
  30. 30. Online approval process cut delays due to missing information, loss of e-mail
  31. 31. The rest of the story…</li></ul> Discovered verbal approvals sometimes skipped process<br /> E-mails not always forwarded<br /> No reliable record of requests existed<br /> “Leakage” may have been as great as one day per person per year<br />
  32. 32. Costs and Savings<br /><ul><li>Costs</li></ul> 5 days to develop application and web interface.<br /> 40 hrs x $40 = $1600.<br /><ul><li>Savings</li></ul> Each request took 10 minutes less time for routing and processing.<br /> 3218 requests in first year.<br /> 536 hrs x $40 = $21,440.<br /> Estimated 5% of employees correctly reported one additional day of vacation each.<br /> 5% x 800 employees = 40 days.<br /> 320 hrs x $40 = $12,800.<br /> Total savings = $34,240.<br />
  33. 33. ROI Calculations<br /><ul><li>Return as a percentage of Investment over a fixed period:</li></ul> (Return / Investment) x 100<br /> ($34,240 / $1600) x 100 = 2140%<br /><ul><li>Return after deducting Investment for a fixed period:</li></ul> Return - Investment<br /> $34,240 - $1600 = $32,640<br /><ul><li>How long until Return equals Investment:</li></ul> Investment / Return per week<br /> $1600 / $658 = 2.4 weeks<br />
  34. 34. Emotions and Financial Cycle<br />

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