ROI: Not All It's Cracked Up to Be

By Channel Insider Staff  |  Posted 2006-12-15 Email Print this article Print
 
 
 
 
 
 
 

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Despite the industry’s emphasis on demonstrating value, calculating return on investment remains mostly guesswork.

The term “return on investment” is one of the it industry’s favorite buzzwords, as vendors go out of their way to show their technologies are worth the money buyers spend on them. Naturally, channel partners in recent years also have placed a lot of emphasis on demonstrating the value of the technology they sell, deploy and service for their end-user customers.

Demonstrating the business value of a technology to customers makes infinite sense, from the solution provider’s perspective.

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The problem is that how exactly customers measure ROI remains, at best, an inexact science. Close to 40 percent of companies polled by CIO Insight, a sister publication of eWeek Strategic Partner, don’t even measure ROI. The survey, which polled IT and business executives, found that 62 percent of companies measure ROI but that the actual value is difficult to calculate.

Fifty-two percent of executives have serious doubts about the results of their companies’ value measurements, and 45 percent concede their metrics do not provide an accurate picture, according to the survey.

Companies resort to various metrics to calculate value, but there is little consensus beyond customer satisfaction on which to use as a standard set of measures. In addition, according to the CIO Insight poll, only about half of the companies believe it is necessary to measure ROI before a project gets under way and after it reaches completion.

Regardless of these results, the focus on ROI isn’t going to fade any time soon. Solution providers’ customers are sure to continue demanding proof the technology they buy is worth the investment. And providers will continue to have to make a compelling case to them about value and do their best to deliver.

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