are the Same.
Get 30 Years of Expertise Immediately.
Fill in the form below and we will get to work right away.
CPU respects your privacy. We will never sell, rent or share to ANYONE. You can trust us.
When an economic downturn starts to hurt, small businesses often hunker down and cut costs. But new technology solutions may be necessary for survival and growth—and they may not be as expensive as you think when you consider their return on investment (ROI). In this three-part series, we’ll review what ROI is, explain how an ROI analysis can help you save or make money, and provide guidelines for analyzing the ROI of a technology investment.
Part 3: Analyzing ROI
As we explained in Part 1 and Part 2 of this series, today, more than ever, small businesses considering a technology investment should analyze not only the costs of that investment, but
the expected ROI as well. Unfortunately, few models exist to guide you through that analysis,
and with good reason: Determining ROI involves looking at many components, then applying those components to your particular situation.
Doing this requires making many choices, so first, let’s look at the things one must consider—from both a cost and benefit perspective—when considering the ROI of a technology investment.
To solve this puzzle, it can be helpful to ask three different but related questions about the technology solution’s cost,effectiveness,andefficiency.
These three types of measurements differ in several ways. While the first is based simply on
Financial metrics—i.e., cost in pure dollar terms—the other two include production output metrics, including the quality of goods or services and customer satisfaction. These production output metrics may even extend to employee morale, or in the case of some companies (such as manufacturers of “green” products or non-profits), social or political benefits.
All of these measurements, however, help you answer the same basic question: whether an economic downturn is a time to reduce technology spending, or a time to examine priorities
and decide which technology investments will pay off in the long-term.
Published on 2nd February 2009 by Jeanne DeWitt.