determining the roi on innovative tech
TRANSCRIPT
Projecting the Return on an Innovative Technology Project
April 2016
What Projects Should You Implement?
What’s worth the
cost?
What’s worth the
cost?
What IS the cost?
Wait, what does
“worth it” mean?
Return on Investment Can Help Decide
CostYour
Return on
Investment
=
Easy, right? Well, no.
Benefits -
Not Everything Is Measurable
Reduced mailing—in $$
Practically impossible to measure in $$
Easy to measure in $$
Advocate time saved—
in $$
Homelessness averted—in $
$
More justice created—in $
$
Estimating Requires Assumptions
You’re never going to get an exact figure. The goal is to define a PLAUSIBLE ROI.
It Often Requires a Chain of Assumptions
How Do We Get There From Here?
Discuss!
What kind of projects are you thinking about for which
a ROI analysis might apply?
Thinking Through Benefits
Cost SavingsHow much money can your new technology save?
Staff Time Saved
How much time can your new technology save?
More Clients Served
Better Service
Outcomes Achieved
Increase in Justice
What Else?
Discuss!
Into that chat: Every benefit you can think
of—measurable, not measurable, whatever.
The Spectrum of Measurability
ROI Analysis Often Involve “Intangibles”
The Spectrum of Measurability
What’s the difference between a “measureable benefit” and an “intangible”? It’s a fuzzy line.
Reduced mailing—in $$
Practically impossible to measure in $$
Easy to measure in $$
Advocate time saved—
in $$
Homelessness averted—in $
$
More justice created—in $
$
Chains of Assumptions
Some Benefits Can Be Measured Directly
Mailing costs saved
Paper and toner costs
saved
Decreased temp hours
Increased fee for service
Often, You Need to Link Things Together
Avg. time saved per clientHourly rate of an attorney
Avg. number served per yearX
X
Advocate time saved, In dollars
An Example: Lawyer Time Saved
ESTIMATE the possible low and the possible high
Low High2 min. 10 min.$80/hr $80/hr
800 clients 1200 clients
$2,133 $16,000
Avg. time saved per client
Hourly rate of an attorneyAvg. number served per year
This Can Be More Art Than Science
This is a thought exercise to see whether going ahead with
a project is a good idea.
Another Example: Averting Homelessness
Even rough estimates can be useful
Low High15 305% 20%
$9,000 $60,000
$12,000 $40,000
Increased number of eviction casesLikelihood that an evicted client will become homeless
Cost to the state per year of a homeless person
At Some Point, You Stop Trying to Measure
Reduced mailing—in $$
Practically impossible to measure in $$
Easy to measure in $$
Advocate time saved—
in $$
Homelessness averted—in $
$
More justice created—in $
$
“I decree that everything in
here is unmeasurable!”
Those are Your Intangibles
“In addition to these measurable costs, we
get all this great intangible stuff as well!”
“Is it plausible that the
intangibles will make this project
worthwhile?”
Stump Laura and John!
What are some things that might be measurable?
Let’s see if we can make some chains of assumptions…
Thinking Through Costs
Hardware and Software Costs
What will it cost to get the tools you need?
Estimate Planning and Implementation
Costs for Defining Processes
You’ll need to take the time to define rules for how to do things.
Consultant Costs
Estimate a range of hours and an hourly wage.
Training Costs
It doesn’t matter how much of a step forward your project is for the organization if no one knows how to use it.
Who should be involved in each step? How much time is it likely to take them?
Cost of Other Staff Time
Ongoing Costs
Factor in future costs to keep your project running after the first year.
Morale Costs
Opportunity Costs
What else could you do if you weren’t devoting the energy to this?
Some of These Costs May Be Intangibles
Putting It Together
Then You Add Them All Together
Low High$250 $350
$4,000 $5,000
Mailing cost saved
Attorney time savedHomelessness averted
$2,133 $16,000
$9,000 $60,000Another benefit
Another benefit $1,000 $1,000$16,383 $83,250
And Compare to Costs
BenefitsSomewhere
from $16K to $83K
Intangibles+
CostsSomewhere
from $20K to $40K
Intangibles+
What does this mean for you?
This Is A Discussion Starter
Benefits$16K to $25K
Intangibles+
Costs$30K to $40K
Intangibles+
Benefits$16K to $100K
Intangibles+
Costs$40K to $60K
Intangibles+
What Do You Think?