Recently, in the webinar “Best Practices in IT Investing,” we sat down with four local government IT leaders to get their thoughts on pressing topics around IT decision making. Last week, we shared their feedback on the hot topic of getting stakeholder buy-in for technology projects. This week, we’re taking a closer look at ROI and Effective Investing.
Nearly 50% of attendees polled during the webinar said that they consider ROI when making investing decisions. Our panelist Jakub Jedrzejczak, Enterprise Imaging Team Manager at Loudoun County, is among the crowd that considers ROI and emphasized the importance of measuring return. He argues that when presenting to decision makers, hard numbers in terms of cost savings for office space, supplies and working hours, can help your case.
Rob Houston, Assistant to the City Manager and IT Manager at the City of Newport Beach, often takes a staff savings approach to measuring ROI, especially after the heavy staff cuts in the City of Newport Beach in 2010. He said, “You need to spend more on these modern tools, but that’s going to leverage staff savings. Then you can make a case that IT really is important—and what’s in it for you? You’re going to be able to leverage better systems, better support, and get by with less staff.”
Anne Hartman, IT Director at Oneida County, looks at ROI from a slightly different perspective—her end goal is to keep legislators happy, and ultimately keep the constituents happy because these legislators listen to the constituents. This is a scenario-based ROI and not a hard numbers based system. So, instead of tying return to a hard revenue or cost saving number, the return is measured by accomplishing both quantitative and qualitative goals—such as citizen satisfaction. This approach has worked well for Anne: her budget has increased over the past four years, despite overall budgets dwindling.
Kimberly Samuelson, Director of ECM Strategy at Laserfiche, noted that the value of IT “can be measured by the improvement in the overall cost to revenue ratio, so then strategic value translates to reducing the cost of operations while enabling innovation.” IT spend can then be compared with operating ratios to indicate the return and success. These ratios depend on the objective of the organization—if the goal is operational excellence, KPIs (key performance indicators) would be a metric. Then, to set enterprise benchmarks and standards to ensure operational readiness and move toward a continuous improvement organization.
Watch the recorded webinar to hear the IT panelists’ full responses, and check back next week to learn how our experts prioritize IT projects!