You might be concerned by how your IT system can consume so much of your staff time and money. You could have it firmly fixed in the cost column and cringe with every purchase. Such a mindset can make it difficult to continue your investment in IT products. If all you see is expense, then you will be mindful of trying to make savings where you can.
However, the calculation of the value of your IT system (and the money it makes you), need to be calculated against the expense. As with the team you train to do your work, your IT system, if managed effectively, can make you money.
Here we want to explore how calculating Return on Investment (ROI) for individual technology, and your overall IT system, can be a useful mechanism for increasing business success.
Impact of inadequate IT systems
Your first step in calculating your investment return is to consider the effect of an inadequate IT system. Imagine you are trying to send out a mass email using a broadcast email tool. Your executive is spending a significant amount of time collating the newsletter information and the contact details of the customers. The systems you have in place exasperate this executive and a job that should have taken her an hour has now taken a day or so over the week she has been plugging away at this.
Calculate the cost of the appropriate software, hardware and cloud access. Now balance this against the value of the executive time this week, and in coming weeks, and the cost to the business of inadequate communication. You will find the money you save and the money you make will exceed the initial outlay for the appropriate technology.
Look into the future
ROI is a useful tool when planning your IT system, as it can open the budget holder’s eyes to the benefit of this cost. When you are putting together bids for projects that involve a capital outlay for technology, you need to consider the future. If the costings you present only cover the current project, then it will be difficult to justify how this cost will be covered. However, if you show how the IT systems can be used for future projects and by other teams within a larger organisation, suddenly the costs seem low to the benefits offered.
It can be a challenge to go beyond specific projects and immediate purchases. However, to enjoy a fulsome return of your investment, your purchase needs to be part of a strategic plan. Ad hoc tech purchases will always feel expensive. Strategic acquisitions focused on the mission of the company as a whole is much easier to justify.
Factor in the intangibles
The essential tip when calculating return on investment is to consider those factors that are not immediately obvious. For instance, if a talented executive is continuously frustrated by the lack of investment in the appropriate tools, they will leave. What would be the cost to the company to lose such valuable human resources? It is such intangibles as the level of productivity and staff morale that can tip the balance when costing technology.
Contact Serval Solutions if you need advice on investing in your IT system.