ROI for IT Departments

Hi Guys,

I have recently be promoted into an IT Manager role.
Are there any technicans here that are cross skilled with business skills?

I am looking into ROI (return on investments) to look into upgrades for some of the sites in the area.

ive googled out the wah-zoo but mostly found sites trying to sell me stuff.

If anyone has any good resources on how to properly produce an ROI specifically for IT it would be very much appreicated.

Thank you.

hey man have u studied the entire area......

Hey Biggystumps,

Firstly you have my sympathy... never an easy task to do. I have never had to do this for IT work but lets see.

Firstly you need to be clear on the purpose of the ROI - To convince someone else (non technical normally) to sign for you a cheque. Keep this in mind, and keep the end report simple & concise.

Then examine the current situation - what needs upgrading and why.

First figure out what the costs of curent setup will be over a realistic period. Most investments will have a life of 3, 5, or 10 years (according to the accountants) so base the costs on that time period (recommend 3 or 5 yrs - it's realistic). this should include ongoing support costs (maintenance contract, licenses, hardware repair etc). Only include staffing costs if an upgrade will reduce them i.e. result in a memeber of staff no longer being needed.

Then figure out what the hidden costs of staying with the current setup - for example decreased reliability leading to increased downtime affecting x users at a cost of £x per working day lost.

Get these costs clear and you have got half the justification sorted and figures that accountants can relate to.

Now look at the upgrade paths and cost them (budgetry costs initially as you may not have suppliers ready yet). Include software, and hardware costs. Also the cost of performing the upgrade (out of hours?), project costs (time to plan & manage the upgrade), and have a good think around the upgrade for potential hidden costs.

Now you are in a position to compare the upgrade costs against the current costs and make a comparison over the chosen time period to find out if the upgrade will pay for it's self.

Alternatively, if the project is fairly major, get your chosen upgrade supplier to write it for you - they want the business so they should help you sell it to your company. If they aren't willing to get a company that will do.

Hope this helps,

R

Hi,

Have a look in the Cool Resources section. One of our friends has posted a whole lot of links. The first one takes you to a knowledge base site, and one of the topics is ROI.

Have a read, and hopefully this will help.

Cheers

Rockape