ROI, Nonprofits & Technology
Initiatives
Beyond “How Much
Does It Cost?”
Beth Kanter, Beth’s Blog
Legal Services Corporation: TIG Conference
January 31, 2008

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Learning Goals

ROI = Return on Investment

What happens if you don’t use
ROI

#1: The Cool New Tool

Meet Charlie

Walter, his boss

Check please!

You should get
iPhones for
your attorneys

Let’s get all
the attorneys
iPhones!

How do I
avoid a
disaster
like …
Charlie is thinking …

Click to Play

Scenario #2: Lost in Translation

Meet Jim

No wasted time scrolling …..

I need a
magnifying glass
to see read this
on the screen!
Why can’t this
spreadsheet fit
on the screen!

And the response?

The monitors we have aren’t broken,
why fix them? We can’t afford it!

Scenario #3:
Proposal - No Buy In and Numbers Only

Meet Sharon

I better copy
those papers
now while no is
using the copy
machine …

The copy machine
isn’t working!
It’s out of
toner!

I can’t find the
staff’s
performance
review from last
quarter ..

Will it
pay for
itself?
Why do
we need
this?

If Charlie, Jim, and Sharon had used
a ROI thinking the endings to these
stories would have been different …

Why Use ROI
• Measures contribution to mission
• Helps you understand the cultural change
issues for successful adoption
• Helps you decide whether to invest or not
• Focus on results, not tools and features
• Helps with forecasting staffing patterns,
available resources
• Alters management and program staff
perceptions of technology

ROI = Return on Investment
What does ROI really mean?

Return on
Investment
(ROI)
Created by DuPont
and used by Alfred
Sloan to make
General Motors
manageable.

Wall Street: Legitimate way to measure
a business performance

ROI = Return on Investment
A pre and/or post evaluation process
and analysis of benefits, costs, and
value of a specific technology
investment over time.

A successful ROI process is …

Simple and Economical

Credible

Micro versus Macro

Considers more than just direct costs

When is ROI used?
When should an ROI approach
be used?

Future

Investing in a Video Conferencing System

Past

How much time will staff members save with laptops?
How does access to technology andProject Pilot
Laptop information improve services to client?

Cost of travel time from monthly time sheet
Mileage
# Trips Needed w/out laptop
# Trips Needed w/laptop
Value of Shifted Time

Use ROI if Project …
• Long Life Cycle
• Mission Critical
• Linked to Strategic Goals
• Large Investment
• Visible or Controversial
• Large Target Audience
• And ….

How much does
it cost?
Can we afford it?

Benefits
Metrics
Value
Costs
The Four Building Blocks of ROI

Benefits
Efficiency
Effectiveness

Efficiency
• Improves the ability to maintain
a system
• Eliminates duplicate systems
• Accommodates increases in
workload or demand without
additional costs
• Reduces manual operations
• Improves efficiency
• Reduces Travel Cost/Time

Effectiveness
• Improves ability to deliver
• Improves access to services
• Improves access to information
• Improves accuracy
• Improves effectiveness of
information delivered

Keep in Mind
• Effectiveness and Efficiency go
hand in hand

Value
Metrics

Tangible Benefits
Tangible Benefits

Objective

Easy to Quantify

Easy to assign money values

We can reduce
staff time and
cut travel
expenses and
save $25,000?
Tangible Benefits

Intangible Benefits

Subjective

Less Credible

Usually Behaviorally Oriented

Job Satisfaction
Productivity
Job Commitment
Work Environment
Morale
Typical Employee Retention
Innovation
Intangibles Competencies
Leadership
Team work
Cooperation
Decision-making
Communication
Client satisfaction
Client complaints
Client response time

Keep in Mind
• When gathering ROI data,
include all benefits regardless of
whether or not they initially
appear difficult to support or
quantify

Conversion Test
1. Does an acceptable, standard metric
exist for the measure?
2. Can the conversion be accomplished
with minimum resources?
4. Can the conversion process be described
to an executive director and secure their
buy-in in two minutes?

“Anything can be measured
in a way that is superior to
not measuring it at all“

Can you Quantify Love?

ROI by the Numbers

You may need to collect data …

Staff Surveys
Staff Interviews
Client surveys
Clients Interviews
Data from system
Task Analysis
Times Sheet Analysis
Articles
Field research
Observation
Secondary research reports
Benchmark studies
Budget and Financial Analysis

Now comes the calculations …

•Compare the total costs
of different solutions
•Compare the total costs
with the benefits
•Compare the costs
of not doing the project
•Identify pilot the goal to identify
cost/benefit

CRM System
Source: Steve Heye,
YMCA National Software ROI Spreadsheet

C
Communicating Results

ROI Storytelling Techniques

What happens if ROI is negative?

Step-By-Step

Let’s Revisit the Scenarios …

Use ROI to Make Purchase or
No Purchase Decision

You should get
iPhones for
your attorneys

What does Charlie need to do?

Looking at Cost/Benefits
Not features to justify
A technology investment

Jim

Large Monitor

The monitors we have aren’t broken,
why fix them? We can’t afford it!

Sharon

I can’t find the
staff’s
performance
review from last
quarter ..

Will it
pay for
itself?
Why do
we need
this?

Summary
Focus on benefits, not features
Resist fondling the hammer
Don’t ignore intangibles
Don’t just present numbers only
Compare costs of alternatives,
cost/benefit, and cost of not doing
Pilot project to get credible numbers
Collect the data you need
Get buy-in by using a committee

Special thanks to
Marc Lauritsen
Douglas Simpson
Ed Marks
Michael L. Monahan
Cynthia A. Vaughn
Ron Wilhoite
Wayne Pressel