Demonstrating ROI for Technology Investments 9.30.13
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Transcript of Demonstrating ROI for Technology Investments 9.30.13
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Demonstrating ROIfor technology investments
Illinois Digital Government SummitSeptember 30, 201310:45-12:00 (concurrent session)
Greg Wass, State of IllinoisEdward Mann, ViON
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Measuring ROI (return on investment)
Initial development/implementation costs, followed by ongoing maintenance costs
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Measuring ROI
Benefits begin to accrue after project go-live; phased project drives faster return
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Measuring ROI
• Breakeven point
• Payback period
• Cost/benefit ratio (over a given time horizon)
• % ROI (annualized)
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ROI for IT projects
1. Benefits include avoided costs, staff reductions, and – most importantly – savings from process improvements for the organization
2. Measure costs and benefits for the entire organization (not just for the IT shop)
3. Prioritize projects based on the ROI to the entire organization
4. Select projects based on a comparison of criticality/value to the business and probability of success (vs. cost/difficulty/risk)
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ROI for IT projects (2x2)
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Probability of success
+
-+-
Don’t fund
Difficult, but high value
Low hanging fruit
Fund selectively
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Contingency #1
Project & organization risk
Time value of money
Economies of scale
Contingency #2
Contingency #3
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Examples of IT projects with potential ROI• Consolidation / virtualization
• Private / hybrid cloud
• Utility computing (at some scale)
• Fiber network (e.g., ICN)
• ERP (reduce operating costs, increase revenues)
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ROI is part of a broader, emerging ethic
Budgeting for Results
• For agencies under the Governor
• FY15 budget to include program performance data
• New appropriations process
• Cost per outcome
Social Impact Bonds
• Evidence-based programs
• Result in downstream savings and/or improved outcomes
• Opportunities for public-private partnerships
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Demonstrating ROIfor technology investments
Illinois Digital Government SummitSeptember 30, 201310:45-12:00 (concurrent session)
Greg Wass, State of IllinoisEdward Mann, ViON