They get requested all the time; a technology ROI model. But how do you build one, what does it tell you, and how are they relevant for technology purchases?

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WHY ARE MANAGERS ALWAYS ASKING FOR THE ROI?

Businesses, and IT groups, always have more projects than they have budget
How do they prioritize which projects to work on? Which ones to ignore?
People higher up don’t understand tech, but they understand finance.

WHY ISN’T ROI EASIER TO CALCULATE? AND DOES ANYONE CARE LATER ON?

ROI could be about making money, saving money, or reducing risk.
ROI Basics: Revenues, Costs, Time
Tech ROI is mostly a scoping activity - what are we including in the calculation?
Tech ROI could be short-term or long-term.
Finance Stuff: CAPEX, OPEX, Depreciation, Time-Value-of-Money, IRR, Hurdle Rate
Good ROI vs. Bad ROI?
Basics: Build a “Before and After” Model
Stuff included in ROI calculations: Expected Revenues, Expected Costs (all of them: technology, people, changes, etc.), Cost Savings/Eliminations, Productivity Improvements, Experience Improvements (Assumptions, Storytelling)
What if the decision-makers aren’t around when the ROI timeline ends?

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How to Build a Tech ROI Model

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