Is ROI Holding You Back?
It’s a key metric for building buy-in for any technology project: identifying the return on investment (ROI). When technology projects were largely tied to improving operations and accuracy, while reducing the labor required to do so, this made complete sense. Operational efficiency, however, is no longer the great uncharted territory for technology. Nearly every last cash register has been replaced by a point-of-sale system and punch cards are largely giving way to sophisticated labor management tools.
IT projects are now expanding well beyond operational improvements, to focus on customer engagement. HT’s research indicates that hotels are prioritizing guest-facing mobility (their top objective according to the just-released 2015 Lodging Technology Study), and restaurants are focusing on mobile wallet and loyalty tools (their top pick for POS upgrades, as reported in this month’s cover story, 2015 POS Software Trend Report). IT executives are also telling us that traditional methods for measuring ROI for these sorts of projects aren’t working.
In his Forrester blog, Andrew Bartels, VP and principal analyst serving CIOs, writes that “old ROI methods are holding back the adoption of new technology.” ROI, he says, is stuck using old paradigms that measure benefits in terms of cost savings as a result of automation. For many new technologies, particularly smartphones, tablets, mobile apps, and enhanced location-aware tools, “the primary business benefit is not doing more work with fewer people. Instead, the main benefit of these new technologies is reducing the probability of bad business outcomes, and increasing the probability of good business outcomes. If a firm tries to measure benefits in terms of headcount or operational cost savings, it won’t find them — and as a result won’t make the investment,” he says.
ROI’s roots are in evaluating one-time, capital projects; but customer engagement isn’t a one-time capital project. As marketing and technology continue to co-mingle, the methods for measuring their combined efforts must change. Solving this challenge should be a key objective for technology and marketing executives in 2015. It may well help prevent your business from falling behind competitors because you’re looking first for a justification that simply doesn’t exist.
IT projects are now expanding well beyond operational improvements, to focus on customer engagement. HT’s research indicates that hotels are prioritizing guest-facing mobility (their top objective according to the just-released 2015 Lodging Technology Study), and restaurants are focusing on mobile wallet and loyalty tools (their top pick for POS upgrades, as reported in this month’s cover story, 2015 POS Software Trend Report). IT executives are also telling us that traditional methods for measuring ROI for these sorts of projects aren’t working.
In his Forrester blog, Andrew Bartels, VP and principal analyst serving CIOs, writes that “old ROI methods are holding back the adoption of new technology.” ROI, he says, is stuck using old paradigms that measure benefits in terms of cost savings as a result of automation. For many new technologies, particularly smartphones, tablets, mobile apps, and enhanced location-aware tools, “the primary business benefit is not doing more work with fewer people. Instead, the main benefit of these new technologies is reducing the probability of bad business outcomes, and increasing the probability of good business outcomes. If a firm tries to measure benefits in terms of headcount or operational cost savings, it won’t find them — and as a result won’t make the investment,” he says.
ROI’s roots are in evaluating one-time, capital projects; but customer engagement isn’t a one-time capital project. As marketing and technology continue to co-mingle, the methods for measuring their combined efforts must change. Solving this challenge should be a key objective for technology and marketing executives in 2015. It may well help prevent your business from falling behind competitors because you’re looking first for a justification that simply doesn’t exist.
