ROI for Technology Projects: Measuring and Delivering Value »

Brian Roulstone has served as Bisk Education’s Chief Information Officer and Chief Technology Officer since 1998. During his tenure, he has transformed Bisk into one of the leading online education companies, which has driven explosive revenue growth. Prior to joining Bisk Education, Brian worked in Arthur Andersen’s Business Consulting practice where his experience included remote learning technologies, system design and implementation, management consulting and business process improvement. His clients ranged from the Fortune 500 to technology start-ups. Brian received his Bachelor of Science in Management Information Systems from Florida State University and his Master of Business Administration from the University of Florida.

Jack J. Phillips, PhD, is a world-renowned expert on measurement and evaluation and chair of the ROI Institute, Inc., which provides consulting services, workshops and keynote addresses for Fortune 500 companies and major organizations around the world. He developed the ROI Methodology™, a revolutionary process that provides bottom-line figures and accountability for all types of training, performance improvement, human resources and technology programs and is used worldwide by corporations, governments and non-profit organizations. His expertise in measurement and evaluation is based on nearly thirty years of corporate experience in five industries. He has served as training and development manager at two Fortune 500 firms, senior HR officer at two firms, president of a regional federal savings bank, and management professor at a major state university. Phillips is the author or editor of more than 30 books and more than 100 articles.

"A new way for measuring and valuing technology initiatives has been revealed. ROI should be part of every discussion when a firm is evaluating key technology investments within their organization. One of the smartest moves a technology professional could make is to educate themselves on the ROI methodology to demonstrate the value of critical technology initiatives within their organization.”

Richard G. Klingshirn, CPA, Executive Managing Director, Affiliated Computer Services, Inc.

“ROI should be a key component of any technology investment decision. This book provides an approach which can be applied to just about any technology project across any industry to ensure decision makers have a clear understanding of the return they should expect before making strategic technology investments. Once embraced by an organization, ROI will become part of every technology discussion to ensure companies maximize the return on their strategic technology investments.”

Dan Vetras, President and CEO, Talisma

“ This book would be of value to any company to truly expose the ROI for their IT or Technology Development departments. Many executives view technology as a costly necessity, this book provides the tools necessary to ensure companies understand the true value of technology which will facilitate continued investments in IT knowing the return is there both in tangible and intangible ways.”

William H. McGill, Chairman, CEO and President, MarineMax

“ This book is a must read for any technology professional who is a champion for strategic technology investments. ROI is the best way to expose the value of making strategic technology investments in any company. This book provides the communication mechanism and measurements that technology leaders require to effectively communicate and mobilize key technology projects and initiatives.”

Tony DiBenedetto, Chairman & CEO, Tribridge Consulting

ROI for Technology Projects: Measuring and Delivering Value presents a proven Return on Investment (ROI) Methodology, based on almost 20 years of development and improvement. It is a process that is rich in tradition and refined to meet the demands facing IT and technology development projects.

With increased scrutiny of technology spending by the most complex organizations in the world, ROI has become one of the most challenging and intriguing issues facing the Information Technology sector. The profession requires a rational, logical approach that can be simplified and implemented within the current budget constraints and resources of the organization. This is the first book of its kind to do just that and is written by two experienced authors in the field. Practical and well-structured ROI for Technology Projects: Measuring and Delivering Value provides a framework and method that can ensure greater success in mobilizing technology initiatives.

Written for managers and executives who are tasked with implementing and executing key technology projects and initiatives within their organizations. It will also be of interest to technology consultants, business analysts, and practitioners who are responsible for scoping, designing, and implementing key technology initiatives within organizations.

D. Brian Roulstone is the Chief Information Officer and Chief Technology Officer of Bisk Education, a leading provider in the online post secondary education and corporate training markets.
Jack J. Phillips is Chair of the ROI Institute, Inc and developer of the ROI MethodologyTM

Preface     ix
Acknowledgments     xvi
About the Authors     xviii
Measuring the Return on Investment for Technology Initiatives: Trends and Issues     1
ROI Progress and Status     3
Why ROI?     9
ROI Concerns     14
Barriers to ROI Methodology Implementation     20
Benefits of the ROI Methodology     22
ROI Best Practices     23
Final Thoughts     27
References     28
The ROI Model: History and Background     29
Building the ROI Methodology     29
An Evaluation Framework     31
The ROI Model     34
Operating Standards and Philosophy     48
Implementation Issues     49
Application and Practice,     49
Final Thoughts     50
References     50
Establishing the Need for the Technology Project     51
Pinning Down the Details: Project Requirements     51
Levels of Objectives for Solutions     55
The Importance of Specific Objectives     60
How Is It All Connected? Linking Evaluation with Needs     60
Planning for Measurement and Evaluation     65
Final Thoughts     71
Collecting Data     73
Sources of Data     73
Questionnaires and Surveys     75
Tests     93
Interviews     98
Focus Groups     100
Observations     101
Business Performance Monitoring     104
Action Planning and Follow-Up Assignments     107
Performance Contracts     116
Selecting the Appropriate Method     118
Data Tabulation Issue     121
Final Thoughts     123
References     123
Isolating the Effects of Strategic Technology Investments     125
Preliminary Issues     125
Use of Control Groups     130
Trend Line Analysis     135
Forecasting Methods     138
Participant Estimate of IT's Impact     140
Supervisor Estimate of IT's Impact     150
Management Estimate of IT's Impact     152
Customer Input of IT's Impact     152
Expert Estimation of IT's Impact     153
Calculating the Impact of Other Factors     153
Using the Techniques     154
Final Thoughts     155
References      156
Exposing the Value of Strategic Technology Projects     157
Preliminary Issues     157
Techniques for Converting Data to Monetary Values     161
Converting Output Data to Contribution     162
Calculating the Cost of Quality     165
Converting Employee Time     166
Using Historical Costs     167
Using Internal and External Experts' Input     168
Using Values from External Databases     169
Using Estimates from Participants     169
Using Estimates from Supervisors and Managers     170
Linking with Other Measures     172
Using IT Staff Estimates     174
Selecting the Appropriate Technique     174
Accuracy and Credibility of Data     175
Final Thoughts     179
Case Study: Staggering ROI Results for a Successful Customer Relationship Management (CRM) Implementation     180
References     182
Tabulating Project Costs     183
Cost Strategies     183
Cost Tracking Issues     188
Major Cost Categories     190
Cost Accumulation and Estimation     197
Final Thoughts     202
References     202
Calculating the Return     203
Basic Issues     203
ROI Interpretation     206
Case Application     214
Other ROI Measures     218
Consequences of Not Investing in IT     220
ROI, the Profit Center, and EVA     221
ROI Issues     223
Final Thoughts     229
References     230
Identifying Intangible Measures     231
Key Issues     231
Typical Intangible Measures     238
Final Thoughts     245
References     246
ROI Forecasting     247
Why Forecast ROI?     247
The Tradeoffs of Forecasting     249
Forecasting/Estimating Performance Improvement     253
Case Example     254
Forecasting with a Pilot Project     257
Forecasting ROI with Reaction Data     257
Forecasting ROI with Knowledge Data     260
Forecasting ROI with Skills and Competencies     263
Forecasting Guidelines     264
Final Thoughts     266
References     161
Communicating Results     268
The Importance of Communication     268
Principles of Communicating Results     270
Analyzing the Need for Communication     272
Planning the Communication     274
Selecting the Audience for Communications     277
Developing the Information: The Impact Study     280
Selecting the Communication Media     283
Communicating the Information     289
Analyzing Reactions to Communication     296
Final Thoughts     297
Reference     297
Implementing the ROI Methodology     298
Overcoming the Resistance to ROI     298
Planning the Implementation     300
Preparing the IT Staff     312
Initiating the ROI Process     316
Preparing the Management Team     318
Monitoring Progress and Communicating Results     323
Cost Saving Approaches     324
Final Thoughts     311
References     328
Appendix     329
Index     337