QUICK AND DIRTY ROI
by: Cary Christian

If you've ever embarked on a major project for your company where achieving a decent return on investment quickly was important, you know the bone chilling fear such a situation can create.

If you're the owner of the company, miscalculation can ruin your business. If you're an employee, it can cost you your job and your reputation.

If only there were a way to be sure your return on investment would be good enough before you commit to the project.

Well, perhaps there is.

The good news is that the method I'm going to describe will be fairly accurate and does not require all the mind numbing analysis you normally think of when considering return on investment. Most analysis of this type is so heavily dependent on assumptions that it's useless anyway, so a shortcut that works is a real benefit.

The bad news is that there is no surefire method of guaranteeing ROI on a specific project. The method I'm going to give you, however, is an excellent predictor of success and involves just five simple factors. These concepts can be applied to almost any type of project, from software development to factory automation to new auditing methodologies. So here we go!

1. Pervasiveness - The more people using the new application or process being developed the greater the potential of realizing positive ROI quickly.

2. Automation of complex or expensive tasks - ROI is realized much more quickly if the project results in making it easier for employees to perform their most complex, and often most hated, tasks more easily. The same is true if the project produces measurable cost savings through automation of expensive tasks.

3. Importance of the subject matter of the project - The more critical the work is that is affected by the project, the easier it becomes to generate a solid ROI.

4. Collaboration - Projects that increase employee interaction with one another and facilitates their working more closely together generates greater value.

5. Reusability and cloning - If the product, knowledge or methodology created can be reused or used in other ways to better other processes, the project creates higher value, and thus, higher ROI.

If you find that these five factors apply to the subject matter of your project, it is highly likely that generating a decent return on investment is not going to be a problem. And you can make this determination very quickly and without making lots of assumptions and spending weeks crunching numbers to build a business case. Use it as a litmus test for every new project you consider. Then, if you must build a formal business case for the project, use these five factors to support it.

Time is money and simple evaluations like this one can save you tons of it!

Copyright (c) 2003