How to Build a Tech ROI Model

They get requested all the time; a technology ROI model. But how do you build one, what does it tell you, and how are they relevant for technology purchases? SHOW: 724 CLOUD NEWS OF THE WEEK - http://bit.ly/cloudcast-cnotw CHECK OUT OUR NEW PODCAST - "CLOUDCAST BASICS" SHOW SPONSORS: Find "Breaking Analysis Podcast with Dave Vellante" on Apple, Google and Spotify Keep up to data with Enterprise Tech with theCUBE ​​CloudZero – Cloud Cost Visibility and Savings ​​CloudZero provides immediate and ongoing savings with 100% visibility into your total cloud spend SHOW NOTES: How to Calculate ROI to Justify a Project (HBR) Guide to Calculating ROI Investing in New Business Tech: How to Calculate ROI WHY ARE MANAGERS ALWAYS ASKING FOR THE ROI? Businesses, and IT groups, always have more projects than they have budget How do they prioritize which projects to work on? Which ones to ignore? People higher up don’t understand tech, but they understand finance. WHY ISN’T ROI EASIER TO CALCULATE? AND DOES ANYONE CARE LATER ON? ROI could be about making money, saving money, or reducing risk. ROI Basics: Revenues, Costs, Time Tech ROI is mostly a scoping activity - what are we including in the calculation? Tech ROI could be short-term or long-term. Finance Stuff: CAPEX, OPEX, Depreciation, Time-Value-of-Money, IRR, Hurdle Rate Good ROI vs. Bad ROI? Basics: Build a “Before and After” Model Stuff included in ROI calculations: Expected Revenues, Expected Costs (all of them: technology, people, changes, etc.), Cost Savings/Eliminations, Productivity Improvements, Experience Improvements (Assumptions, Storytelling) What if the decision-makers aren’t around when the ROI timeline ends? FEEDBACK? Email: show at the cloudcast dot net Twitter: @thecloudcastnet FEEDBACK? Email: show @ the enterprise ai show dot com Bluesky: @TheEntAIShow.bsky.social Twitter/X: @TheEntAIShow Instagram: @TheEntAIShow