The IT project ROI is a performance metric whose main objective is to efficiently evaluate whether process automation has generated a positive response, whether financial or managerial.
Its calculation can measure factors such as increased or decreased productivity, the existence of infrastructure bottlenecks, improved information flow, among others.
The convergence point between strategy planning and the efficiency of its application (such as time, learning proficiency, and the absence of technological obsolescence in the chosen system) are the results obtained after its implementation.
In this post, we will discuss the viability of an IT project and how calculating ROI is necessary to monitor the impacts of adopting new technologies. Check it out!
IT Project ROI as a Performance Metric
The ROI calculation can be done by subtracting the investment cost from the gain resulting from the implementation of IT projects. Then, this result is divided by the investment cost again, according to the following formula:
IT Project ROI = (Implementation results – Investment cost) / Investment cost
For example: let’s say that when implementing a new ERP (Enterprise Resource Planning), the productive efficiency gain achieved (better sales rates, among other organizational advantages) was calculated at R$ 500 thousand. Meanwhile, the total investment cost (software cost, purchased hardware, network implementation, learning time, among others) was R$ 100 thousand. Therefore:
(500,000 – 100,000) / 100,000 = 4
This result means that the ROI, that is, the return rate of this IT investment, was four times the initial investment. To quantify it as a percentage, simply multiply the result by 100. Thus, in the example, the ROI was 400%.
All revenues and expenses, no matter how small, must be included to obtain an accurate result. Furthermore, external factors can directly influence this result, making it difficult to measure ROI perfectly.
Indicators that Help Calculate IT Project ROI
By evaluating the ROI of IT projects, it is possible to financially justify projects that often involve high investment values, higher implementation and maintenance costs, and difficulty in perceiving their advantages.
However, to obtain an even more accurate ROI value, it is important to measure other intangible performance indicators. We highlight a few:
- Management effectiveness: measured by the speed in decision-making gained through better reports;
- Customer satisfaction: reduction in churn (customer cancellation rate), lower volume of merchandise exchanges, and service complaints;
- Marketing campaign reach: measured by the increase in leads contacting the company, ease of acquisition, and customer loyalty;
- Improvement in organizational culture: proactive and responsive employee behavior, speed in system usage, and reduction in downtime rates.
Despite the difficulty in measuring these performance indexes, the implementation of IT projects guarantees companies:
- Productive efficiency, with higher production volume in less working time and minimal process errors;
- Revenue expansion with increased sales;
- The possibility of embracing new market opportunities.
IT project ROI is a performance metric whose main objective is to ensure results for managers, even if in the long term. In this context, it is important to plan strategies that minimize the bottlenecks arising from the implementation of these projects and monitor other company performance indicators to see if there is a positive return.
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