
I have sometimes witnessed puzzled looks on faces of customers while presenting business cases with big Return on Investment (ROI) projections.
I am writing to share my experiences in an attempt to identify common themes for creating authentic and convincing ROI models and business cases.
Actually, I have a hidden agenda as well. I am helping to update SAP’s web-site on value management. So, in addition to your feedback on this blog, I am seeking suggestions for topics for this web-site.
This project has a big ROI- so what?
Over the last 20 years, I have developed business cases and ROI calculators for IT projects, based on SAP as well as other solutions. The projected customer savings and ROIs have ranged from low and modest to really huge (of course depending on a bunch of factors such as customer size, current state of business operation, etc.).
Often customers do not trust the projected benefits running in tens of millions of dollars per year… or a 100 BILLION DOLLARS (just kidding.. that last number was inspired by an Austin Powers movie :smile: )
Consider following examples (numbers rounded off to maintain customers’ confidentiality).
Interestingly, the above numbers were all reasonable and realizable for those specific project situations. The challenge in fact was in convincing the customer, and demonstrating that these were not consultant “hyped up” numbers.
Building convincing ROI models
Here are a few suggestions:
See the big picture
It is important to understand that building Business Case/ ROI is only one activity during the discovery phase of the Value Management lifecycle. SAP defines value management lifecycle phases as “Discovery”; “Realization”; and “Optimization”.
ROI/ Business case is not just about number crunching, but also suggesting smart and cost-effective strategies for IT projects. In an earlier blog, I had explained how SAP SRM Rapid-Deployment Solutions can be used not just to reduce time to implement, but also to help realize good Return on Investments.
Lastly, creating a value management mindset is very important. SAP Value Academy helps promote adoption of value management among SAP customers.
I am a Sr. Principal with SAP’s Business Transformation Services group. Prior to SAP, I worked at a large consulting firm as Partner and management consultant. Please respond to this blog on SCN. You may email me privately @ anil.joshi@sap.com
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