With 44% of businesses planning to increase their technology spending in 20201, investing in new technology is an absolute must to stay ahead of the game. Technological investments aren’t just important for staying competitive, they also are crucial for keeping your customers secure, staying compliant with government regulations, and improving sales and brand reputation. In fact, one in four enterprises are increasing their technology budget due to a recent security incident1.
In this competitive market, investments in technology are nerve-racking since their ROI is not immediately clear. There are many factors that make calculating traditional ROI for technological investments an unpleasant and unreliable experience.
Technological investments aren’t just important for staying in the game, they also are vital for keeping your customers secure, staying compliant with government regulations, supporting and communicating with your front line, and improving sales and brand reputation. In fact, one in four enterprises are increasing their technology budget due to a recent security incident1.
ROI is not the most complicated of performance measures for capital investments. It’s your classic case of plugging numbers into equations to produce a number that tells you how your investment did. Unfortunately, when you invest in technology this ROI doesn’t come out to be quite so simple. Technological investments involve a much more complicated set of variables.
Consider the equation for ROI:
There are many additional factors that go into both the gross benefits and investment cost variables. For example, when estimating gross benefits, you cannot just take total sales as your number. You have to take into account how the technology may be helping your company to remain cost competitive, differentiating you from your competitors, increasing product quality, increasing the quantity and quality of information being shared to your front line, and/or making your staff more productive. Similarly, you can’t just count costs as the price of purchasing the technology. Implementation costs must be combined with the costs of training your employees, ongoing technical support, and future customization or changes to your technology.
It’s easy to see that the ROI equation for technological investments is more than meets the eye, but it begs the question: what should you do about it? Our suggestion is that you think beyond the equation and include these additional variables to create a more holistic understanding of the risks and rewards of your investment.
- Cost of deploying technology of a set period of time
- Cost to customize interface for your needs
- Cost to train users
- Anticipated future costs for maintenance, improvement, and legal compliance
- Sales increases
- Improved productivity rate for support employees
- Enhanced product quality
- Differentiated status amongst competitors
- Improvements to brand reputation and customer satisfaction
ROI for technological investments is never going to be a straightforward, cut-and-dry measurement. There are simply too many unmeasurable variables to hammer out an equation and call it a day. Getting as many metrics together to calculate ROI as well as considering more qualitative data helps to secure a more comprehensive understanding of what is being ventured, as well as what stands to be gained.
Investing in new technology is a stressful and complicated experience. We’re prepared to help you minimize the risks and maximize the rewards when you take a chance on something new.
About Weber Associates
Weber Associates is a Columbus, OH-based consulting firm. Since 1985, we have blended the creativity of a marketing agency with the analytical rigor of a consultancy to help our clients solve real sales and marketing challenges so they can significantly grow revenues and customer loyalty.