Blogs

Calculation such as return on investment (ROI), total cost of ownership, payback period, and net present value (NPV) are calculated and may be used to either select the best solution or negotiate better terms on a solution that may have the wrong cost structure.

The more people affected by the application, the higher the potential ROI.  Simply, touch a lot of people and you increase the impact of the application.

The more often you help the employee, the greater the ROI. Are you deploying an application that will help the employee in their daily activities and updating it regularly, or once every three years?

Nucleus Research case studies reveal that, on average, indirect benefits account for half of technology ROI. Clearly, every organization attempting to calculate ROI from a proposed IT investment should recognize indirect returns like productivity.  [source Nuclease Research - Report E19 - Indirect benefits - the invisible ROI drivers]

An indirect benefit is a return that cannot be directly observed but is nonetheless realized -- as opposed to direct benefits like reduced headcount or increased sales that are more easily quantified. Worker productivity is the best example of an indirect benefit from a technology; greater efficiency doesn't always lead to the removal of an existing expense item but is realized in the sense that it enables employees to perform their jobs better and faster.

Productivity is a key reason for deploying new technology today, but to accurately measure the productivity-based returns from technology you need to have a structured, clear approach. Using correction factors that reflect employees' position, motivation, and level of supervision and gathering corroborating evidence to support your calculations will ensure accurate estimation of the returns from productivity.

Companies should not choose an application that is the cheapest, rather choose the application that provides the greatest benefit or return for the company. The Holy Grail for IT is not minimizing the cost technology, but maximizing benefits from it.

Download the recent Nucleas Research Guide Book for Microsoft Dynamics NAV  which reports that when deployed properly, Dynamics NAV can deliver a payback in fewer than 18 months.