We all know that predicting accurate IT costs can be tricky. Associated costs are often forgotten, and the total cost of ownership (TCO) (defined by Gartner as the total cost of using and maintaining an IT investment over time) is hard to estimate. Further complicating matters? Calculating the ROI for your organization’s technology investments—especially since true ROI must now include a combination of quantitative and qualitative factors. Even if your organization has the quantitative ROI data regarding technology spends (clear and measurable factors such as reduced personnel, fewer hours spent on specific tasks, etc.), the qualitative data rarely moves beyond “It’s better than it used to be” and “The staff seems happy with it” because indirect costs and benefits can be hard to pin down.
Qualitative or soft ROI is the term used to describe the benefits of technology which are tough to quantify, but still have a strong impact on the organization and should be weighed in any technology decision. It often encompasses factors such as productivity, efficiency, customer satisfaction, and how staff “feels” about the technology. Below are some questions to guide you in determining the qualitative ROI of a current or prospective technology investment:
- Will the technology help in the running of your business? If so, how?
- Will this technology investment boost employee morale?
- Will the tech investment under consideration serve to enhance your employee retention rate and/or serve as a recruiting tool (i.e., if you give every employee a new iPhone upon hire, that might serve as a recruitment and hiring bonus)?
- Will this technology make your organization more effective?
- Will it enhance your customer or client experience with your organization?
- Will it save staff hours?
- Will the technology make you more competitive in the marketplace?
If you can answer yes to the majority of the above questions when assessing a potential technology, the qualitative ROI for that technology is high.
Our current economic climate has made total cost of ownership and in-depth IT financial analyses a top priority. Executives are looking at return on investments across their organization, but demanding it in IT. Understanding TCO can help you reduce unnecessary expenditures and reallocate resources to more important business functions. In addition, When TCO is combined with qualitative and quantitative ROI analyses, the benefits of the technology that may not be readily apparent will be illuminated. More data equals a more informed perspective from which to better evaluate competing solutions and IT investments.