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Edward Mann Greg Wass, Illinois Government
Demonstrating ROI for Technology Investments
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Return On Investment
Why factoring in ROI for the storage enterprise is a requirement
for
success.
Modern storage infrastructure should address several key issues
foryour enterprise. It should also bring a measurable and
calculable returnon your investment.
ROI for your data center should create benefits for your
enterprise inthe following ways:
Solve key business problems
Improve IT efficiencies
Increase business agility
Enable rapid development/deployment
Enable business growth
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Setting Goals
In order to initiate a study for determining ROI a number of
goals
should be elucidated. Goal setting permits defining a clear
path.
Examples of goals are:
Overall IT cost reduction
Strategic business advantage
Operating efficiency
Mandated
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Initiators
There are some initiators (first factors that begin the process)
in
considering storage consolidation.
Performance problems
New systems and technologies
Expansion
Need to be competitive
Spend it or lose it
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A Value Chain
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Four key measures Determine Outcome
ROI Return On Investment: ratio of net gain divided by total
cost
NPVNet Present Value: net benefit in todays currency terms
IRR - Internal Rate of Return: discount rate needed to drive the
NPVto zero. OR the value some other investment would need to bring
inorder to be the equivalent to the outflow in cash of the
investmentbeing considered.
Payback Period (Break even) time frame to yield a
positivecumulative cash flow
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Calculations that help determine ROI
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Tangible Benefits Measurements
Cost of implementation measured against possible savings and
gains:
Capital expenses
Implementation and training On-going management and support
Operations and contracts
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Tangible Benefits Realized
Labor savings
Capital expense reductions
Productivity benefits
Business benefit
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Intangible Benefits
Brand recognition ( your brand) reinforce, advance, change
Competitive advantage - get stuff out there quicker, meet
changingdemands faster, scale easily and more effectively, gain
market share
Intellectual capital - relevant knowledge gained
Organizational advantage - efficiency and corporate
culturally
Risk avoidance - cost of not implementing
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Risk Assessment
Labor resources not available, lack of required skills
User acceptance not all are happy with change, may see changeas
a threat, I.E. you have implemented a UNIX solution, and someonly
understand Novell.
Vendor- may not be capable of delivering what they promised in
thetime-frame that was promised (think about an SLA)
Management commitment and funding
Market or strategic either the company changes its
strategicdirection or market forces change in an unanticipated
direction
Organization employee morale or organizational dynamics
(some
may be down-sized)
Other dependencies other projects may not be complete and
arerequired for completion (power, cooling, space, resources,
budget)
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A Parting Thought
Jim Collins in his excellent book,Good to Great
articulates well the rolethat technology should play in the
enterprise. E.G. new technologyshould not be the motivation to
upgrade; rather it should be a tool todrive the business to meet
its goals. He gives several illustrations ofthis concept, which I
will leave to his book.
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QUESTIONS AND
DISCUSSION
