Definition

Learning Guide: ROI

Return on investment (ROI) measures how effectively a business uses its capital to generate profit; the higher the ROI, the better. ROI is arguably the most popular metric to use when comparing the attractiveness of one IT investment to another.

ROI is usually stated as a percentage over a specific amount of time; in IT purchasing, three years is the most common time span since technology is often effectively obsolete after three years. Calculating ROI involves two parts: knowing what to measure and understanding how to quantify the value of those measurements into actual dollars.

 

  Learn more about ROI
 

BI ROI calculation: Issues and methodology
Some global case studies claim 1,000+% ROI, while some research analysts claim that 80% of BI initiatives fail to deliver. BI ROI can be very difficult to measure. Here are some of the issues you should look out for when conducting ROI exercises for BI deployments.

Calculating ROI on IT projects is useful but not sufficient
Calculating ROI on IT projects is necessary and useful. ROI is only as good as the assumptions that go into it, however -- including a company's track record on project delivery.

Proven IT ROI strategies in an economic downturn
CIOs who calculate ROI on IT projects are more likely to get executive approval, especially in an economic downturn. Learn how to effectively calculate ROI on new investments in BPM, ITSM and enterprise risk management.

ROI strategies for CIOs
Here are five of our top ROI articles, with useful resources and advice to make better cases for IT projects.

How to calculate ROI and TCO for virtualization projects 
Finding out how to calculate ROI and TCO can be a challenge with virtualization projects. Depend more on your ROI calculations and less on vendors' virtualization ROI calculators.

Business intelligence ROI: Five keys to justifying BI investments
Justifying the value of business intelligence (BI) investments is uniquely challenging, according to analysts and end users -- particularly because there's no straightforward ROI equation.

ROI calculators: Honest projections or fuzzy math?
Tools that help build a business case and illustrate those returns are growing in popularity. While this sudden influx of tools gives the average CIO the ability to make a spending case in front of corporate budget watchdogs, there remains a debate as to which ROI calculators are the most credible.

ROI formula for Unified Communications as a Service
Finding an ROI formula for UCaaS isn't as easy as looking at an equation. Understand the variables and methodology for calculating ROI before making your decision.

See also: EBITDA (earnings before interest, taxes, depreciation, and amortization), total cost of ownership (TCO), spend management, cost management

 

This was last updated in April 2005
Posted by: Margaret Rouse

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