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