1.
Understanding ROI Just
Enough to Get (or Keep)
Your Project Funded
Heather Kotula
VP, Marketing and Communications
hkotula@accessinn.com
505-998-0800 x123

2.
 Poor project planning
 A weak business case
 Ineffective or insufficient management
support
Why Do Projects Fail?

3.
 Benefits of the proposed change
 Communicating those benefits
Understanding is the beginning of approving.
André Gide
Building a Business Case:
First Things First

4.
 Business problem or opportunity
 Benefits
 Risk
 Costs
 Likely technical solutions
 Timescale
 Impact on operations
 Organizational capability
Assess This

5.
 What is your goal?
 What’s stopping you from reaching the goal?
 How much change is needed to overcome the
problem?
 Are you certain this will solve the problem?
Ask Yourself

6.
 Brief and convey only the bare essentials
 Interesting, clear and concise
 Free of conjecture
 Light on jargon and buzzwords
 Your vision of the future
 Clear about the value and benefits
 Consistent and easy to read
Your Business Case Should Be

7.
 Executive Summary
 Introduction
 Analysis
 Conclusion
Major Sections

8.
Brief and concise
Remember

9.
 Measure To Manage
 Measure what's important
 Publish your metrics and benchmarks
 Reward people for exceeding their goals
 And then keep tuning the metrics
The Ol’ Business Adage

10.
 Metrics are used to track all areas of business
 KPIs – Key Performance Indicators – are used
to target and track critical areas of
performance
Metrics vs. KPIs

11.
Metrics Matter
Metrics are a concrete way of defining what a
[knowledge management or content
management] project will achieve, and whether
it met those goals.
James Robertson, StepTwo

12.
What Should Metrics Include?
 Targets to be set
 Success to be assessed
 ROI to be estimated
 Ongoing viability to be tracked
 Lessons to be learned in the process

13.
Make Metrics Good
The most powerful metrics are those that directly
measure the desired business outcomes.

14.
Expressing Metrics
DO SAY
 Improve the rate of
product cross-selling
by front-line staff
 Improve the average
number of intranet
hits to 30,000 per day
by June
DON’T SAY
 Deliver information
more effectively
 Improve intranet
usage by staff

15.
 Operating Productivity
 Hours Worked Per Process
 Return on Investment
What Kind of Metrics?

16.
Review Cycle

17.
What is ROI?

18.
For example
 Original cost of investment is $50
 Increased sales is $200
 ROI is 3 times the original cost

19.
ROI, Traditionally Speaking
 Calculated retrospectively
 From existing accounting records, which provides
for transparency of the numbers
 Real money – money invested and money
returned from the investment

20.
Traditional Cost Components of ROI
 Infrastructure – software, hardware, hosting
 Labor – Salaries for internal personnel, Consultant
Fees
 Training – internal personnel training by third
parties, end-user training

21.
Traditional Returns Components of ROI
 Cost savings
 Cost avoidance
 Increased revenue
 Revenue enhancement
 Revenue protection

22.
 Required investment
 Payback period
 Estimates
 Assumptions
 Project risk (probability of success or failure)
What You Should Quantify

23.
 Alignment of an initiative with business
strategy
 Interdependence of projects and systems
from an overarching view
 Effectiveness of the system (qualitative
measure of its “goodness”)
 Efficiency of the system (what it does per
dollar invested)
ROI usually fails to address:

24.
…ROI is designed to assess
profitability or financial efficiency
…and therefore has limitations.
And…

25.
…in order to calculate an ROI–like measure for
information infrastructure investments, we have to
address intangible benefits.
Therefore…

26.
 Costs of upsetting customers
 Costs of failure due to inappropriate system or
faulty implementation
 Incompatibility with other systems leading to
unexpected costs of software amendments,
tailoring, and maintenance
 Costs of errors due to lack of experience in
using new system
Intangible Costs Might Include:

27.
 Costs of losing staff morale
 Costs of losing a competitive edge
 Costs of declining company image
 Loss of investment in prior or legacy systems
 Temporary drop in productivity during the
change
Intangible Costs Might Include:

28.
 Better information
 more timely information
 more accurate information
 faster access to data
 uniform information (well-formed data)
Intangible Benefits Can Include:

29.
 Better use of information
 strategic and organizational planning
 resource control
 asset deployment
 flexibility and transparency
Intangible Benefits Can Include:

30.
 Increased productivity
 Time savings
 Happier staff
 Increased job satisfaction
 Happier customers
 Improved findability and discovery
 Better corporate image
Intangible Benefits Can Include:

31.
How do you quantify intangible
costs and benefits?

32.
 Total Economic Impact (TEI) from Forrester
Research Inc.
 Business Value of IT (ITBV) program developed by
Intel Corporation
Other Metrics For Measuring Value

33.
 Methodology developed by Forrester
Research, Inc.
 “When discussing the project, use this entire
sentence to reinforce the project and its
value.” ChipGliedman
Total Economic Impact (TEI)

34.
“We will be doing ______ to
make ________ better, as
measured by _______, which
is worth ________.”
TEI - Forrester Research Inc.

35.
“We will be doing [THIS PROJECT OR
ACTIVITY] to make [PAIN POINT] better,
as measured by [METRIC(S)], which is
worth [ESTIMATED PAYBACK].”
TEI - Forrester Research Inc.

36.
 User productivity, as measured by increased
capacity
 Program effectiveness toward market growth
 Organizational efficiency
 Customer satisfaction, in terms of additional sales
to current customers or decreases in account
turnover
Quantifying Benefits with TEI

37.
 Developed in 2002 at Intel Corporation
 Business Value Dials (Indicators)
Business Value of IT (ITBV)

38.
 Exploration
 Planning
 Development
 Deployment
Business Value of IT (ITBV)
Intel Corporation

39.
 Connect
 Ingoing communications and reporting
 Report back at the close of the project
“A Business Case For Taxonomy”

40.
What is the value of…

41.
What is the value of…

42.
“Change what you think and say before you
change anything else, and focus your comments
always on business outcomes.”
RichardHunter
Change Happens

43.
“Show the value of IT as an investment in business
performance.”RichardHunter
Show Off

44.
What’s the Final Answer?
A. I can use Google to find the answer
B. My biggest competitor has the answer
C. My organization has a unique answer
D. Jabin has the answer but he won’t tell me

45.
Questions?

46.
Heather Kotula
hkotula@accessinn.com
505-998-0800 x123
Thank You