Download - Determining the ROI on Innovative Tech
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Projecting the Return on an Innovative Technology Project
April 2016
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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?
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Return on Investment Can Help Decide
CostYour
Return on
Investment
=
Easy, right? Well, no.
Benefits -
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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 $
$
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Estimating Requires Assumptions
You’re never going to get an exact figure. The goal is to define a PLAUSIBLE ROI.
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It Often Requires a Chain of Assumptions
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How Do We Get There From Here?
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Discuss!
What kind of projects are you thinking about for which
a ROI analysis might apply?
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Thinking Through Benefits
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Cost SavingsHow much money can your new technology save?
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Staff Time Saved
How much time can your new technology save?
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More Clients Served
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Better Service
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Outcomes Achieved
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Increase in Justice
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What Else?
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Discuss!
Into that chat: Every benefit you can think
of—measurable, not measurable, whatever.
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The Spectrum of Measurability
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ROI Analysis Often Involve “Intangibles”
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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 $
$
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Chains of Assumptions
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Some Benefits Can Be Measured Directly
Mailing costs saved
Paper and toner costs
saved
Decreased temp hours
Increased fee for service
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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
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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
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This Can Be More Art Than Science
This is a thought exercise to see whether going ahead with
a project is a good idea.
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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
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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!”
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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?”
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Stump Laura and John!
What are some things that might be measurable?
Let’s see if we can make some chains of assumptions…
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Thinking Through Costs
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Hardware and Software Costs
What will it cost to get the tools you need?
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Estimate Planning and Implementation
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Costs for Defining Processes
You’ll need to take the time to define rules for how to do things.
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Consultant Costs
Estimate a range of hours and an hourly wage.
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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.
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Who should be involved in each step? How much time is it likely to take them?
Cost of Other Staff Time
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Ongoing Costs
Factor in future costs to keep your project running after the first year.
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Morale Costs
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Opportunity Costs
What else could you do if you weren’t devoting the energy to this?
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Some of These Costs May Be Intangibles
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Putting It Together
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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
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And Compare to Costs
BenefitsSomewhere
from $16K to $83K
Intangibles+
CostsSomewhere
from $20K to $40K
Intangibles+
What does this mean for you?
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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+
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What Do You Think?