ROI analysis innovative technology project
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The document discusses how to estimate the return on investment (ROI) for an innovative technology project. ROI analysis can help decide which projects to implement by comparing estimated benefits and costs. Benefits include both measurable savings like reduced mailing costs as well as intangible outcomes that are difficult to measure in dollars. Estimating benefits often requires making assumptions and linking outcomes in a chain. For example, linking time saved per client to hourly wage and number of clients served to estimate total attorney time savings. While not exact, rough estimates are useful. ROI analysis can show if anticipated benefits plausibly outweigh costs even when including intangible factors. The process involves estimating both benefits and costs at a low and high range to evaluate different scenarios.
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ROI analysis innovative technology project
- 1. Projecting the Return on an Innovative Technology Project April 2016
- 2. What Projects Should You Implement? What’s worth the cost? What’s worth the cost? What IS the cost? Wait, what does “worth it” mean?
- 3. Return on Investment Can Help Decide Cost Your Return on Investment = Easy, right? Well, no. Benefits -
- 4. Not Everything Is Measurable Reduced mailing—in $$ Practically impossible to measure in $$ Easy to measure in $$ Advocate time saved—in $$ Homelessness averted—in $$ More justice created—in $$
- 5. Estimating Requires Assumptions You’re never going to get an exact figure. The goal is to define a PLAUSIBLE ROI.
- 6. It Often Requires a Chain of Assumptions
- 7. How Do We Get There From Here?
- 8. Discuss! What kind of projects are you thinking about for which a ROI analysis might apply?
- 10. Cost Savings How much money can your new technology save?
- 11. Staff Time Saved How much time can your new technology save?
- 13. Better Service
- 16. What Else?
- 17. Discuss! Into that chat: Every benefit you can think of—measurable, not measurable, whatever.
- 19. ROI Analysis Often Involve “Intangibles”
- 20. The Spectrum of Measurability What’s the difference between a “measureable benefit” and an “intangible”? It’s a fuzzy line. Reduced mailing—in $$ Practically impossible to measure in $$ Easy to measure in $$ Advocate time saved—in $$ Homelessness averted—in $$ More justice created—in $$
- 22. Some Benefits Can Be Measured Directly Mailing costs saved Paper and toner costs saved Decreased temp hours Increased fee for service
- 23. Often, You Need to Link Things Together Avg. time saved per client Hourly rate of an attorney Avg. number served per year X X Advocate time saved, In dollars
- 24. An Example: Lawyer Time Saved ESTIMATE the possible low and the possible high Low High 2 min. 10 min. $80/hr $80/hr 800 clients 1200 clients $2,133 $16,000 Avg. time saved per client Hourly rate of an attorney Avg. number served per year
- 25. This Can Be More Art Than Science This is a thought exercise to see whether going ahead with a project is a good idea.
- 26. Another Example: Averting Homelessness Even rough estimates can be useful Low High 15 30 5% 20% $9,000 $60,000 $12,000 $40,000 Increased number of eviction cases Likelihood that an evicted client will become homeless Cost to the state per year of a homeless person
- 27. At Some Point, You Stop Trying to Measure Reduced mailing—in $$ Practically impossible to measure in $$ Easy to measure in $$ Advocate time saved—in $$ Homelessness averted—in $$ More justice created—in $$ “Idecree that everythingin hereis unmeasurable!”
- 28. Those are Your Intangibles “In addition to these measurable costs, we get all this great intangible stuff as well!” “Is it plausible that the intangibles will make this project worthwhile?”
- 29. Stump Laura and John! What are some things that might be measurable? Let’s see if we can make some chains of assumptions…
- 31. Hardware and Software Costs What will it cost to get the tools you need?
- 32. Estimate Planning and Implementation
- 33. Costs for Defining Processes You’ll need to take the time to define rules for how to do things.
- 34. Consultant Costs Estimate a range of hours and an hourly wage.
- 35. Training Costs It doesn’t matter how much of a step forward your project is for the organization if no one knows how to use it.
- 36. Who should be involved in each step? How much time is it likely to take them? Cost of Other Staff Time
- 37. Ongoing Costs Factor in future costs to keep your project running after the first year.
- 38. Morale Costs
- 39. Opportunity Costs What else could you do if you weren’t devoting the energy to this?
- 40. Some of These Costs May Be Intangibles
- 42. Then You Add Them All Together Low High $250 $350 $4,000 $5,000 Mailing cost saved Attorney time saved Homelessness averted $2,133 $16,000 $9,000 $60,000 Another benefit Another benefit $1,000 $1,000 $16,383 $83,250
- 43. And Compare to Costs Benefits Somewhere from $16K to $83K Intangibles + Costs Somewhere from $20K to $40K Intangibles + What does this mean for you?
- 44. This Is A Discussion Starter Benefits $16K to $25K Intangibles + Costs $30K to $40K Intangibles + Benefits $16K to $100K Intangibles + Costs $40K to $60K Intangibles +
- 45. What Do You Think?
Editor's Notes
- Like most nonprofit organizations, you probably have a long list of technology needs. It’s easy to get caught in the trap of wishing you had more time and money to tackle them. Meanwhile, the list gets longer and more daunting.
- Technically ROI is a percentage.
- Let’s start with the benefits.
- There are likely line items in your budget that you wish you could cut down or eliminate completely. For example, attorneys in large states often have to travel great distances to see clients and occasionally have to stay overnight. Implementing technology that allows clients to speak with an attorney remotely could save hundreds of dollars per client.
- Many service delivery technologies promise huge time savings. For example, a document assembly system could significantly reduce the amount of time an attorney spends helping clients fill out routine paperwork. To determine how big your time savings will be, estimate how much time each paperwork task takes you and how often your organization completes that task. Then think through how much time it would take with a document assembly system. The difference is your time savings.
- Central to every legal aid organization’s mission is the belief that every litigant deserves fair representation. Unfortunately, limited time and funding are barriers to that goal. Client numbers are relatively easy to track—any case management system will help you do this—but you’ll need to also think about self-help clients and how to count them. For example, you might use web analytics or a system that requires online users to create a profile to capture this information. Kiosks, mobile apps, and other mobile outreach efforts should also include ways to count the number of people reached.
- Sometimes organizations struggle just to provide minimal services and can never fully provide what they know their clients really want or need. For example, combined triage and intake systems can help applicants get more information and go more quickly to where they can get the most help. For people who would otherwise be turned away because they don’t qualify for legal aid, document assembly and expert systems provide them with more in-depth help than they would get doing a Google search or trying to fill out the forms alone at their kitchen table. Figuring out how to measure the value of additional clients served or an improvement in the quality of services can be tricky. One way might be to consider how much the client him or herself would pay to get the services or increase the quality of those services. Another way is to calculate how much taxpayers might save if more people receive your services or get a higher level of service from your organization.
- Let’s start with the benefits.
- But one woman’s intangible is another’s measurable benefit
- Let’s start with the benefits.
- Next, start thinking about your goals and how to link them to things you can measure. Are you seeking to serve more clients? Or shorten the amount of time attorneys spend on routine tasks? To track your progress against each of these goals, you will need metrics that quantify them. This might not always be direct: For example, you can estimate the amount of time an attorney currently spends with each client by tracking it for a week and calculating an average. Or you could use client satisfaction reports as a proxy for the successful outcome of the case. Don’t feel you need to have one definitive number in any particular category. The idea isn’t to have perfect measures—just ones that are useful.
- Once you have tracking metrics in place, you need to assign plausible values. For example, if saving attorney time is valuable to your organization, then you need to define how much time you could plausibly save. For instance, maybe you could save at least two minutes per client on average, but there’s no way you’re going to save more than ten minutes per client. If you then multiply each end of the range by a plausible hourly rate for an attorney, and multiply the number of clients the attorney might see, you have a high and a low value for the plausible cost savings.
- It’s important to stress: This is not science. The values are estimates and are being derived as units of comparison. In the example we just looked at, the organization did not save $2,133 real dollars. What we can learn is that another project that costs twice as much, but could save four times more attorney hours, plausibly offers a better return on investment.
- Now that we’ve looked at some of the benefits of service delivery technologies for legal aid organizations, let’s talk about costs—not just the immediate, obvious costs, but what you’ll have to spend throughout the entire project.
- Hardware and software are the most obvious costs of any technology project. You may be able to get a good estimate of these costs online. If not, call a few vendors—most will give you a ballpark price. It’s important to remember that much of this cost is absorbed in the first year. To get a good sense of the true cost of your project, a five-year view makes the most sense. This multi-year perspective allows you to account for lower equipment or licensing costs in the years after implementation.
- Also, keep in mind that your project has two halves. When estimating, make sure you account not only for the cash going to software or hardware, but also the staff time and consultant dollars that go into planning, designing, and completing your project.
- New systems often mean carrying out familiar processes in a new way. You’ll need rules in place to make sure people are using the technology properly and you’ll need to assign someone to be responsible for maintenance. But most importantly, you’ll need to spend time training people on your new system. It doesn’t matter how big a step forward your project is for the organization if no one knows how to use the technology.
- If you choose to hire a consultant, you’ll need to define an approximate cost. It’s probably easiest to think of it as a range of hours and then an hourly wage. Most consultants will be happy to talk to you and give you a ballpark estimate of how much you might need to budget, likely with the hope of being on your list when you’re looking to hire. You can also talk to other organizations that have hired consultants for similar projects to get a sense of how long it took and how much they charged.
- Even if you hire someone to do most of the work, there will still be staff time required—to talk about goals, define requirements, make decisions, define processes, get trained, and more. List out the steps for your project and take a crack at estimating the people who will be involved and the number of hours for each. If you feel you have no idea how much time it might take, consider asking a consultant to help you come up with a rough estimate.
- And don’t forget to factor in the ongoing costs of maintaining your project in year two and beyond. It’s unlikely that you’ll be able to simply launch your technology into the world and then stop investing any time or money. Services such as document assembly or online learning tools will need to be updated with new content as laws change, so make sure you budget enough and have a plan for keeping it running long term.
- Also, make sure to calculate in the cost of diverting time and attention from other work. Your attorneys may need to spend less time with clients during your technology project. Will the resulting technology help you make up that lost time? Is the long-term benefit big enough to justify any short-term losses?
- Let’s start with the benefits.