ROI Is Dead. Long Live ROI.

November 4, 2015 by

“Strive not to be a success, but rather to be of value.” – Albert Einstein

“What’s the return on investment?” – Some executive, somewhere, being spoken right now.

Technology investments are only going one way – up. We’ve entered the “second half of the chessboard,” experiencing exponential growth in the uses of and demands upon technology. Yet still we think in a legacy way when ascertaining value of investment. The “I” should be relatively easy; it’s the anticipated cost of the technology. It should be the total cost, projected over the life of the technology (three-five years a reasonable rule of thumb), and include all costs (e.g., people, hardware/software, services). The “R” is the tough part, because there is not just one type of return and may not manifest in hard dollars.

Avoiding the downside: Technology investments increasingly support the “new normal,” and if you don’t do them (and do them well), the lack will be a negative differentiator. Results could include customers fading away or untoward risk. Examples include Wi-Fi, security, business continuity. There may not be any return discernible on the balance sheet. There may be cost avoidance, because these items can be centralized so that an organization is not spending more than it needs.

Cost of doing business: Enterprise resource planning (ERP) systems fall into this category. We have to manage our finances and pay people. The “R” derives from process engineering enabled by ERP that maximizes automation and efficiency, so that resources can be applied elsewhere. ERP implementations and ongoing management should be driving continuous improvement.

Innovate to save, grow, delight: New solutions should be fueled by creativity and the energy achieved from “failing fast.” Leaders must encourage, incubate, and apply real dollars to the best of the ideas. Outcomes may vary: efficiency, effectiveness, quality, sales growth, customer retention, new markets…

No matter what the I, the R will be varied and multi-faceted. The trick is to know the Is that will yield the right Rs, and define and measure outcomes relentlessly.

The one “R” ROI is dead. The multiple “R” ROI lives.

Asides:

Thoughts on Educause 2015 #EDU15. Good: Keynotes by Daniel Pink and Adam McAfee, the Lego wall. Bad: Long lines to get badges, cacophony of exhibit hall, vendor email spam before/after/during. Mediocre: Hit or miss of sessions – too many choices, uneven quality.

Soft skills are equally as important as technical skills. Teamwork, writing skills, time management, problem solving. The stuff you learn at great institutions like MSU and UNH.

Thanks Hyatt (not) for the mediocre free Wi-Fi (I refuse to pay extra for the real Wi-Fi). When will hotels get that (good!) Wi-Fi should be like pillows –  just there.

Anyone catch that “roi,” means “king” in French, hence the title of this blog…. admittedly realized it as I was writing it. Thank you, high school French class.

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