What is 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.
How do you calculate ROI?
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.
Is ROI having an identity crisis?
It seems that the term "ROI" is in the midst of an identity crisis. The business units often define the term differently than the IT organizations.
Read the full article: Is ROI having an identity crisis?
This was first published in March 2004