Measuring Technology Payback

Software Magazine, Feb, 2001 by Julie Lavallee

Cost justification tool determines ROI of IT investments

With signs that IT spending is starting to slow as corporations tighten their bclts, organizations can no longer put large amounts of money into IT budgets without knowing the return on investment. "In the past, IT initiated projects without justifying the value of the technology they were bringing to the company, and without knowing if there would be any ROI," says Bill White, systems analyst for Wacker Silicones Corp., a raw materials and research company manufacturing silicon (waxes, toners), based in Adrian, Mich.

White and others now have a tool to cost-justify technology investments and determine return on investment. The ROInow! financial justification tool from CIOview Corp. (formerly Avantsoft), Boxborough, Mass., can help technology leaders determine the cost and benefit of an IT project before it is deployed.

Wacker Silicones used the tool to justify a project implementing technology from Citrix Systems, Fort Lauderdale, Fla., determining exactly what the company would be spending and what the payback would be, says White. "ROInow formulates a document that is coherent and explains step by step on how the ROI is calculated. There are no questions.

By creating "what if' scenarios using ROInow!, a user can build a strong business case for senior management about a potential IT investment, including payback periods, cost, and roll out. The tool's three-level analyses include a PreView, FullView, and ReView. In a five-minute session, via the Web or CD, a user chooses the IT projects, the required budget, and the number of users to determine the ROI. The "what if" analysis capability compares different implementation approaches.

In addition, changes can be made, including cost of capital, tax rate, and depreciation. Cost and benefit categories can be deselected if they do not apply to the project. The document includes a 26-page report detailing the yearly cost and benefit, printed using Crystal Reports, or exported to Microsoft Word or HTML.

CIOview products utilize patentpending accounting methodology, and include knowledgebases derived from hundreds of customer case studies combined with industry data from market researcher International Data Corp. (IDC)., Framingham, Mass., Vested Development Inc., Woburn, Mass., a software development services company that specializes in helping software companies rapidly deliver solutions to the marketplace, assisted with the code base of ROInow!, and is currently working on the next version expected this March.

"ROInow! is a new way of doing business," says Joe Loiselle, IDC director of IT advisory tools. "It is an objective and interactive return on investment solution," says Loiselle.

"CIOview enables us to justify all the products from now on," says White, "Being able to justify one project creates a domino effect for us to justify all of our budgets."