Deciding to invest in a new IT solution is a huge decision for any business, especially when that solution will change the way processes are carried out across the entire organization.
But knowing the ROI is worth it can help make enacting that change easier and get stakeholders on board, especially during the pitch and budgeting process.
But let’s back up — how do you get a higher ROI on IT investments?
When to Invest in IT
First, it’s important to ask yourself why you’re considering the solution in question. Is your current infrastructure no longer able to keep up? Is it failing completely? Have your current systems and/or processes aged out or do they no longer make sense for your organizational goals?
Next, consider how the new IT solution will make your business better. Will it help reduce time-to-market? Will it improve communication between departments? Will it streamline existing processes?
Once you have a solid understanding of why your business is ready to take the leap, it’s crucial you understand how your current systems, processes, and networks function. That’s because, when it comes to ROI, you’ll need to benchmark your new and improved performance against your current performance (or lack of).
Consult your IT team, or whomever manages systems and operations for your organization. Ban jargon so you ensure you have a solid grasp of the hardware and software currently being used, and how processes work. This way, you can document, and later review, these operations to ensure optimal performance.
Last but not least, make sure you have the right people and skill sets for the job. Installing a new IT solution can be tricky, so whether you’ll be doing self-implementation, vendor services implementation, or third-party implementation, it’s important you know who will be taking the lead on the project, along with who the more tactical team will be.
Achieving a Higher ROI
Once you know moving forward with a new solution is the right move, how do you prove initial ROI and eventually achieve higher ROI?
According to Enfocus Solutions, the financial benefits of IT investments typically fall into five categories:
- Revenue Enhancement: For example, if the new solution can help you upsell and cross-sell different products or services.
- Cost Reduction: Reducing (but not always eliminating) costs, like lowering maintenance costs through better technology.
- Cost Avoidance: Eliminating costs completely, such as by reducing errors or duplicate processes.
- Capital Reduction: Reducing capital expenses, like storage and server capacity costs.
- Capital Avoidance: Similar to cost avoidance, this would help get rid of a capital expense entirely (like moving from on-premises to cloud storage).
Ultimately, investing in the right IT solution can improve your bottom line. But it doesn’t stop there:
- Improved data analysis can identify strengths and weaknesses in your processes, making your organization more efficient
- Interdepartmental communication can be drastically improved, meaning your teams are quicker and more effective
- It can help reduce mistakes (operator errors, incompatible bundling, etc.)
- It can quicken your processes (ensuring quotes get out in a timely manner, etc.)
- It can make your teams and processes more effective, which makes for happier customers
Don’t just invest in the newest and shiniest IT solution. These are big decisions, so you need to do your due diligence, see what your organization needs, and understand your current processes so you can see how a new solution can improve them. Calculate the ROI of the new investment up front so that you can continue to improve it year-after-year and enjoy the benefits of improved systems, more effective teams, and happier customers!
Matt Noyes is a Product Marketing Manager at FPX.