IT MATTERS: ROI for Tech Deployments in the Downturn

2001 Volume 4 Issue 4

What criteria should tech managers use to evaluate the ROI for new technology? Recent research by the Delphi Group and others indicates that reduced cycle time, or faster value-chain integration, and increased customer retention are the key metrics.

What criteria should tech managers use to evaluate the ROI for new technology? Recent research by the Delphi Group and others indicates that reduced cycle time, or faster value-chain integration, and increased customer retention are the key metrics.

Decreased cycle time provides a hard metric for assessing how technology increases an organization’s ability to deliver a new product, reposition current offerings, and build partnerships. The effect is a substantial reduction in the cost of developing, deploying, and distributing any new product or service in ever more complex value chains.

Customer retention is equally important. In times of economic uncertainty, the value of existing customer relationships is magnified. According to the Delphi Group, the use of key technologies, such as customer portals, creates a strong bond with customers and a greater likelihood of continued stable revenues. It also increases the likelihood of increased revenue opportunity through cross-selling and up-selling. In assessing customer perceptions, the immediacy of access through self-service was ranked as the highest criterion for valuing the impact of a technology. Most customers in this study indicated that the costs of moving to a new supplier are often much higher than the savings that may actually be realized.

Importantly, ROI is not a single event. Instead ROI has to be proven not just before implementation but post-implementation in order to sustain the project through the payback period.

About the Author(s)

Charla Griffy-Brown, PhD, is an associate professor of information systems at the Graziadio School of Business and Management. In 2004, Dr. Griffy-Brown received a research award from the International Association for the Management of Technology and was recognized as one of the most active and prolific researchers in the fields of technology management and innovation. A former researcher at the Foundation for Advanced Studies on International Development in Tokyo, she has also served as an associate professor at the Tokyo Institute of Technology. Dr. Griffy-Brown graduated from Harvard University, is a former Fulbright Scholar, and holds a PhD in technology management from Griffith University in Queensland, Australia. She has worked for NASA at the Kennedy Space Center and has taught innovation/technology management courses in Australia, Singapore, Indonesia, Malaysia, and Japan. She has also served as a consultant for the United Nation's Global Environmental Facility and the European Commission.

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