Respond to discussion boards

Fernando Recinos - Return on Investment (ROI) for IT - IFSM 495 6381 Trends and Practical Applications in Information Systems Management (2208) When it comes to business, there is one concept that is used throughout all types of businesses: return on investment. Return on investment (ROI) “is a key performance indicator (KPI) that’s often used by businesses to determine [the] profitability of an expenditure” (Hawkins, 2016). To calculate ROI, an individual will take the gains from the investment and divided by the investment’s cost. It is suggested that individuals who are calculating ROI should take “into consideration other factors that may be less obvious such as time, hidden costs and fees, and even emotional factors such as stress” because “all of these things can significantly impact your ROI” (Hawkins, 2016). If the results return positive, you have gained from your investment (congratulations!). If the results return negative, you have not gained from your investments and you will need to look into changing that.

When it comes to the IT world, this is more complex than how it sounds when you put ROI in a generalized business setting. Mary Pratt from CIO.com discusses “that CIOs are under extreme pressure to defend their investments and prove ROI”, especially when “nearly all business proposals today have a technology component that needs financial evaluation” (Pratt, 2019). Future CIOs and PMs take note: it is

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important to understand how to tell the story. When you are discussing ROI for IT, individuals will need to broaden their view and resources to determine the ROI on an IT project. Mary Pratt reached out to CIOs to understand how CIOs, future CIOs, and PMs can present ROI.

For starters, the individuals who need to present ROI for an IT project needs to first understand the business impacts and also understand the KPIs being affected. When you are looking into these factors, you should also remember that you are not alone and shouldn’t do it alone. CIOs have suggested individuals should reach out to business partners (like CFOs and COOs), external partners, and their own staff/fellow staff members to understand the business impacts and the KPIs that are being affected. This information should help explain how the project can bring ROI from an IT initiative. Mary notes that the CIOs who start early in understanding the business impacts, understand KPIs that are affected, that has created a team with partners, and start projecting early are most successful in explaining an IT project’s ROI (Pratt, 2019). Beyond this, there are minor things that are needed to be able to fully explain the ROI. Those minor things can be as minor as being accurate by constantly fixing your numbers as the investment continues being used. Throughout the whole understanding of the ROIs, Mary notes that CIOs need to remember “technology projects today often deliver benefits that can be equally hard to quantify” (Pratt, 2019). That being, think about those ROIs and mention them.

Now that we have set the stage for ROI, let’s start thinking through this with these questions:

1. For those who have experience in this field, think back at the times you needed to present ROI for an IT project. What could

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have you done differently or what would you suggest to help to those individuals who will need to do this in the future?

2. What other helpful information have you studied and found about ROI?

3. It was mentioned to get external partners’ help to explain ROI for an IT project. For those who have done this, how did it help you? For those who never experienced this, do you agree with these suggestions?

4. If you feel these suggestions do not help, what would you suggest or what information would you need to be successful in presenting ROI?

Cheers,

Fernando

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