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ROI: Nonprofit Technology


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Beyond Asking How Much Does It Cost?

Published in: Economy & Finance, Technology

ROI: Nonprofit Technology

  1. ROI, Nonprofits & Technology Initiatives Beyond “How Much Does It Cost?” Beth Kanter, Beth’s Blog Legal Services Corporation: TIG Conference January 31, 2008
  2. 1 2 3 4 5 Learning Goals
  3. ROI = Return on Investment
  4. What happens if you don’t use ROI
  5. #1: The Cool New Tool
  6. Meet Charlie
  7. Walter, his boss
  8. Check please!
  9. You should get iPhones for your attorneys
  10. Let’s get all the attorneys iPhones!
  11. How do I avoid a disaster like … Charlie is thinking …
  12. Click to Play
  13. Scenario #2: Lost in Translation
  14. Meet Jim
  15. No wasted time scrolling …..
  16. I need a magnifying glass to see read this on the screen! Why can’t this spreadsheet fit on the screen!
  17. And the response?
  18. The monitors we have aren’t broken, why fix them? We can’t afford it!
  19. Scenario #3: Proposal - No Buy In and Numbers Only
  20. Meet Sharon
  21. I better copy those papers now while no is using the copy machine …
  22. The copy machine isn’t working! It’s out of toner!
  23. I can’t find the staff’s performance review from last quarter ..
  24. Will it pay for itself? Why do we need this?
  25. If Charlie, Jim, and Sharon had used a ROI thinking the endings to these stories would have been different …
  26. 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
  27. ROI = Return on Investment What does ROI really mean?
  28. Return on Investment (ROI) Created by DuPont and used by Alfred Sloan to make General Motors manageable.
  29. Wall Street: Legitimate way to measure a business performance
  30. 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.
  31. A successful ROI process is
  32. Simple and Economical
  33. Credible
  34. Micro versus Macro
  35. Considers more than just direct costs
  36. When is ROI used? When should an ROI approach be used?
  37. Future
  38. Investing in a Video Conferencing System
  39. Past
  40. How much time will staff members save with laptops? How does access to technology andProject Pilot Laptop information improve services to client?
  41. Cost of travel time from monthly time sheet Mileage # Trips Needed w/out laptop # Trips Needed w/laptop Value of Shifted Time
  42. Use ROI if Project … • Long Life Cycle • Mission Critical • Linked to Strategic Goals • Large Investment • Visible or Controversial • Large Target Audience • And ….
  43. How much does it cost? Can we afford it?
  44. Benefits Metrics Value Costs The Four Building Blocks of ROI
  45. Benefits Efficiency Effectiveness
  46. 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
  47. Effectiveness • Improves ability to deliver • Improves access to services • Improves access to information • Improves accuracy • Improves effectiveness of information delivered
  48. Keep in Mind • Effectiveness and Efficiency go hand in hand
  49. Value Metrics
  50. Tangible Benefits Tangible Benefits
  51. Objective
  52. Easy to Quantify
  53. Easy to assign money values
  54. We can reduce staff time and cut travel expenses and save $25,000? Tangible Benefits
  55. Intangible Benefits
  56. Subjective
  57. Less Credible
  58. Usually Behaviorally Oriented
  59. 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
  60. Keep in Mind • When gathering ROI data, include all benefits regardless of whether or not they initially appear difficult to support or quantify
  61. 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?
  62. “Anything can be measured in a way that is superior to not measuring it at all“
  63. Can you Quantify Love?
  64. ROI by the Numbers
  65. You may need to collect data …
  66. 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
  67. Now comes the calculations …
  68. •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
  69. CRM System Source: Steve Heye, YMCA National Software ROI Spreadsheet
  70. C Communicating Results
  71. ROI Storytelling Techniques
  72. What happens if ROI is negative?
  73. Step-By-Step
  74. Let’s Revisit the Scenarios …
  75. Use ROI to Make Purchase or No Purchase Decision
  76. You should get iPhones for your attorneys
  77. What does Charlie need to do?
  78. Looking at Cost/Benefits Not features to justify A technology investment
  79. Jim
  80. Large Monitor
  81. The monitors we have aren’t broken, why fix them? We can’t afford it!
  82. Sharon
  83. I can’t find the staff’s performance review from last quarter ..
  84. Will it pay for itself? Why do we need this?
  85. 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
  86. Special thanks to Marc Lauritsen Douglas Simpson Ed Marks Michael L. Monahan Cynthia A. Vaughn Ron Wilhoite Wayne Pressel