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the180 - Towards a Better Technology ROI

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Towards a Better Technology ROI (Return on Investment)

Most companies make decisions to build technology based on some projection of its dollar value.

  • Revenues.
  • Savings.
  • Financial ratios such as ROI (Return on Investment).

The missing pieces for such financial projections:

  • The success rate.
    • The chance that someone can use the technology successfully.
  • Clear understanding of what is a "successful" use of a technology.
    • If someone can buy something at a web site in a reasonable time on their own, that is a success.
  • The cost for each successful use of technology.
    • The time it takes the employee or customer.
    • The allocated cost of computer resources per each use.
  • The cost for each unsuccessful use of technology.
    • If someone must call the help desk to fill out a form, that is arguably not a "success." Using the technology costs more time and money than using the old form.

The lack of visibility and accountability for the success rate of technology has been a major contributor to the failure of web sites and technology projects.

  • IT projects can and do get cancelled due to not meeting user needs.
    • Typically IT management will fault businesspeople for lack of clear input.
  • The dot.com crashes.
    • Even if people wanted to buy something, they could only 40% of the time at web sites. (per uie.com)
    • Many early web sites were geared towards boardroom presentations, not towards a successful use by the customer.
  • Why build technology unless it can be used successfully?
    • Of course, nothing is perfect, so what success rate is required for your technology? 99%?   60%    40%?
  • If success rate mattered from the outset, this rate would be monitored and tracked early in development and throughout the technology life cycle.
  • Any financial decision to justify technology expenditures that included a success rate would undoubtedly recognize the primary importance of maximizing this rate.

Next the180 topic: A Proposal for Technology ROI

Posted April 29, 2002
By Joe Grant

edited on May 29, 2002

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