Talk with someone you know with some IT experience (perhaps someone in your IT department ). Ask them if they know of some examples of IT ROI extremes (they don't need to be first hand). Try to provide a discussion thread for one of each:
- A project that had very good Return on Investment — can they think of reasons why it was successful?
- A project that had a negative Return on Investment — why do they think it failed?
Don't forget — avoid specific mentions of company, individuals or brands. For example, "An online company was trying to integrate a better customer relationship management (CRM) package…"
The Good
Employees within my organzation are required to meet required training hours per year. These credits are offered through optional courses as well as mandatory ones through the Government, both on-line and with instructor led courses. With over 10,000 employees it would be very time consuming as well as difficult to keep track of their status.
In 2003, the Individual Development Plan tool was implemented company wide as a self service tool for employees. The cost of this project was in the millions to implement in various locations, and set up all employees. But the ROI for this tool would efficiently track data such as emplyee credits, requirments test scores and ensure consistency in curriculum. The ROI on this IT investment has been proven successful over the years.
The Bad
Even though this tool has been able to succesfully track employee's individual Developments, the tool itself can have its kinks. When specific training is mandatory for employees, only so many can access the tool at once. Limiting usaged under strict time lines. Any errors made in the selection process of courses or on line testing needs assistance from qualified professionals through email in which cannot be corrected until the next day, which holds up the process. Frustration is common among employees when deadlines need to be met and you cannot talk to a helpdesk to correct a problem or even access the tool.
The ROI of this investment shows more positives than negatives, but the negatives can be frustrating.
For some of you, this may be a bit greek until we go into the SOA some more, but you will see the comments on ROI.
[http://apsblog.burtongroup.com/2009/01/soa-is-dead-long-live-services.html]
I actually can speak Greek —- its this computer language that confuses me!!!! :)
These investment in IT, such as data storage, gives better return on investment since they are not very expensive and requires few management. These investment in It, such as switch of email system from one to another, typically gives worse return on investment since it does not really make any significant changes from the previous one. At least in most cases, a email systems to send and receive emails.
What I'm looking for is more a specific example. If the company invested in a datastorage technology, what did it cost (roughly?) How do they measure the return? How do they know they got good return on investment? If they had to add storage, how did they pick one solution over another? For example — let's say they had a choice between identically sized storage solutions, but one was 20% faster than another for 25% more money — how do they choose? Cost is easy, but what about return (dollar amount?). These are difficult questions to answer. I don't expect you to have these answers, but they are good questions to ask. Usually someone in IT can tell you of an example of a project that definitely had a strong positive ROI, and one that didn't.
I printed out the questions you suggested and asked our IT support. Here are the answers; for data storage, it is driven by the technology platform. Since our production group is mainly focus on genmic DNA sequencing and the data size in the range of tetrebits. The data storage is choosed by scientists rather than IT and, appearently, they did seem to care too much about the ROI.
The email system convertion from current email system to a new email system is a decision by the corporation headquaters. I spoke to the IT and I was told that their are no part of the decision makers and the corporation make the decision to change. It may help to streamline the email system cross the whole company while there are serveral email systems from all these subsides.
The ROI does not seem important for IT.
I have been in charge for an IT investment at my company for about 1 year now. The investment was twofold; part of it was for a software package that includes server software, an unlimited client license for my business unit and a services contract of 3 onsite people. This software will help control the cost of print in our environment, and since this cost was never controlled or even completely known, the savings possibilities are enormous. We compared the software to many other choices in a comparison matrix with 4 other types of software. We ran a pilot of 2 different software packages and purchased one of them. We then built an ROI package with our IT financial group and our investment should yield an 89% return on investment over 5 years (the deal on the software is 5 years). The total amount spend would be returned after the first calendar year of the project in full swing, (first 4 months were validating ROI assumptions and creating strategy). After 8 months the project is achieving the savings predicted by the Internal Rate of Return document that was created. The ROI was estimated by using an ROI calculator we created that would help us determine how much print we could effectively change and we could restructure contracts with vendor's to lower the cost of print devices. Obviously this isn't the most exciting of projects but the ROI is tremendous for an IT project.
This company I was working for 7 years ago implemented this Smart Station in our nationwide system of database for about $30 million. First when it was implemented it was great, because it was installed in separate parts with the main parts being trading and some information to get to. As they installed all of its features, the problems were coming and were here. During the peak trading hours, we were facing a lot of problems; 1. We couldn’t get the necessary information 2. It was always crashing. So we couldn’t do trading and had to call it in. imagine thousands of brokers calling in the trading desks and help desks inputting trades that we had to honor. That created a lot of issues when it comes to executing trades that we had to honor and millions of dollars to the firm every day that it lost. After IT fixed those issues, there have been no problems since.
The ROI, besides for that issue with those issues just mentioned, grew 10% per year for 7 years.
(just a disclosure, I am not with that company anymore. And Smart Station is a trading platform that a lot of companies use.)
The IT staff of my agency has not been available to discuss ROI. So, I'll talk about a work situation that touches upon ROI, but it's still not resolved. It's what I can offer from my experience.
As in many companies and government agencies, my agency keeps and receives confidential information. Disks and laptops are certainly encrypted. For the last six months I've been asking the IT department to purchase a specific application that would allow some of our states to transfer some information electronically through a secure site. It all started with one of our states who already purchased the application and suggested we do the same so that they can transmit the data. I found it pretty 'cutting edge." I wanted our region, NERO, to be the first in the country to implement such process for this specific project. I talked to IT staff from the state and from our agency, I had conference calls and followed up with emails to discuss the process. I requested that our region purchase the application asap. There was some hesitation as our IT staff wasn't too familiar with the application.
HQ finally contacted me and informed me that other regions around the country wanted to work on similar projects. HQ decided not to purchase the application our state suggested because it wouldn't serve our agency well. HQ IT was in fact doing research and looking into an application that could be used nationwide. They were thinking about ROI. They explained that they didn't want to invest (or waste money) on different applications that would ultimate serve the same purpose. They were going to check all states systems and come up with one application that could potential serve them all. Although that's not the answer I was expecting, they made the right decision. We need to make sure we are investing our money wisely. We are projecting, estimating and considering the the actual value of our potential investment.
My department began to weigh the options of becoming paperless. Using millions of pieces of paper as well as multiple file rooms, management recognized the impacts on both the environment and the climbing costs. Partnering with the IT department to figure exact costs of printer ink, paper reams, etc. versus the cost to implement a document storage database, it was concluded that the cost of the document storage, called Docushare, would be more cost beneficial. Not only would this almost eliminate paper usage, it also provided a way for people around the company to access these documents without contacting us to pull the folder, scan the document, and email it.
All and all, ROI was figured before the decision to go paperless in terms of how much are we saving not using paper and purchasing Docushare.
The Good
A project was developed to integrate the primary financial application (SAP) with forecasting and booking tools across the company. According to my IT source, the project was a "huge" success. The re-use of technology provided "auditable, reconcilable data, near real-time planning data access, simplification and alignment of FP&A and information environment." The total labor for building the program to sit on-top of SAP was projected at $750k while the total savings across five years was $2.3M. The primary reason for success was due to the fact that they leveraged existing technology and support structure.
The Bad
Another project that used the company's primary financial app (SAP) along with integration with another (COGNOS). The goal of the project was to deliver an 'integrated forecasting and planning tool to the businesses that currently do not have one'. One of the concerns early on was the enormity and complexity of the tasks, systems, and people involved. Needless to say this program never got off the ground due because "…we went way over budget and part of the deliverable was not utilized or desired by the customer."
The Bad
Im trying to understand the capacity that the Endicott Mexico campus needs to run and efficient internet wireless service for our students. Currently we have a 2GB internet connection that has created a major problem of conectivity. Now that internet access is so inexpensive and available at even cafes in town, we need to lower our existing internet packageg at the Mexico campus, due to its cost and lack of effeciency. The challenge is finding the best option to lower cost and increase efficiency.
This is a current bad that should turn into a good in a short term period.
An online services company needed to purchase a load and performance test application to improve scalability. This application would be used to simulate thousands of connections/transactions per second. After evaluating possible solutions the final three candidates provided the same basic features. However, two of the three would roughly cost $100,000 for a single license. The third would provide 3 licenses for about $50,000. The company chose the third and as a result three different development groups were to use their own server. Not only did the company save $50K for the initial investment the ROI was even greater because rather than time sharing a single server each were able to work concurrently.
A local startup developing web service architecture decided to invest in high end Dell servers with Oracle databases. Due to poor investigation into hardware requirements resulted in long delays in bringing the servers online and purchasing expensive oracle licenses for a service that had not been developed yet put the company at great financial strain. In the end, not choosing a less expensive or open source database was a key contributor in the company’s depletion of venture funding. The company was broken into pieces and sold for next to nothing.