Demonstrating ROI
for technology investments
Illinois Digital Government Summit
September 30, 2013
10:45-12:00 (concurrent...
Measuring ROI (return on investment)
Initial development/implementation costs, followed by ongoing maintenance costs
2
Measuring ROI
Benefits begin to accrue after project go-live; phased project drives faster return
3
Measuring ROI
• Breakeven point
• Payback period
• Cost/benefit ratio (over a given time
horizon)
• % ROI (annualized)
4
ROI for IT projects
1. Benefits include avoided costs, staff reductions,
and – most importantly – savings from process
imp...
ROI for IT projects (2x2)
6
Probability of success
+
-
+-
Don’t fund
Difficult,
but high
value
Low
hanging
fruit
Fund
sele...
Contingency #1
Project & organization risk
Time value of money
Economies of scale
Contingency #2
Contingency #3
7
Examples of IT projects with potential
ROI
• Consolidation / virtualization
• Private / hybrid cloud
• Utility computing (...
ROI is part of a broader, emerging ethic
Budgeting for Results
• For agencies under
the Governor
• FY15 budget to
include ...
Demonstrating ROI
for technology investments
Illinois Digital Government Summit
September 30, 2013
10:45-12:00 (concurrent...
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Demonstrating ROI for Technology Investments 9.30.13

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Presentation to 2013 Illinois Digital Government Summit on calculating and demonstrating ROI and business value of IT projects in public sector

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Demonstrating ROI for Technology Investments 9.30.13

  1. 1. Demonstrating ROI for technology investments Illinois Digital Government Summit September 30, 2013 10:45-12:00 (concurrent session) Greg Wass, State of Illinois Edward Mann, ViON
  2. 2. Measuring ROI (return on investment) Initial development/implementation costs, followed by ongoing maintenance costs 2
  3. 3. Measuring ROI Benefits begin to accrue after project go-live; phased project drives faster return 3
  4. 4. Measuring ROI • Breakeven point • Payback period • Cost/benefit ratio (over a given time horizon) • % ROI (annualized) 4
  5. 5. ROI for IT projects 1. Benefits include avoided costs, staff reductions, and – most importantly – savings from process improvements for the organization 2. Measure costs and benefits for the entire organization (not just for the IT shop) 3. Prioritize projects based on the ROI to the entire organization 4. Select projects based on a comparison of criticality/value to the business and probability of success (vs. cost/difficulty/risk) 5
  6. 6. ROI for IT projects (2x2) 6 Probability of success + - +- Don’t fund Difficult, but high value Low hanging fruit Fund selectively
  7. 7. Contingency #1 Project & organization risk Time value of money Economies of scale Contingency #2 Contingency #3 7
  8. 8. Examples of IT projects with potential ROI • Consolidation / virtualization • Private / hybrid cloud • Utility computing (at some scale) • Fiber network (e.g., ICN) • ERP (reduce operating costs, increase revenues) 8
  9. 9. ROI is part of a broader, emerging ethic Budgeting for Results • For agencies under the Governor • FY15 budget to include program performance data • New appropriations process • Cost per outcome Social Impact Bonds • Evidence-based programs • Result in downstream savings and/or improved outcomes • Opportunities for public-private partnerships 9
  10. 10. Demonstrating ROI for technology investments Illinois Digital Government Summit September 30, 2013 10:45-12:00 (concurrent session) Greg Wass, State of Illinois Edward Mann, ViON
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