This is PART 5 of Making a Case for Technology Purchases for Nonprofits – PART 1 is here, PART 2 is here, Part 3 is here, Part 4 is here.
When one considers everything involved in making a case for purchasing new technology, this final step of measuring your results seems to be occurring a bit too late in the process.
How will you make your case to justify new hardware or software by showing how well is works after your purchase?
Looking at the Return on Investment (ROI) of your technology decision accomplishes several tasks. First, it allows you to demonstrate to your stakeholders that you are determined to verify the effectiveness of this purchase by tracking the numbers and the feedback from users. Second, it gives you credibility for any future decisions on additional purchases – your results will show that you made the correct choice for your agency. Finally, by evaluating the usefulness of your new product, you’ll be able to make sure you’re achieving the results you want. You may find you’re not receiving as great a time savings, or salary/staff reductions, or an increase in revenue as was expected. By maintaining the proper facts and figures, you’ll be able to make better decisions to get the most from your investment.
Many who work for human services organizations shy away from for-profit business terms such as Return on Investment (or Total Cost of Ownership (TCO)) because they don’t feel it applies to them or their nonprofit mission. But the ROI is a fair way to review effectiveness and measure your results.
To see your return, you can use the simple formula for ROI as a way to see how well the new technology is working – you subtract the savings/revenue/gains from the cost of investment, divide that amount by the cost of the investment, and multiply by 100 to get your return percentage.
Keep in mind, the figures required can be complicated and require some digging to get the best results. For example, the cost of the investment is usually more than the purchase price. So include related costs, such as: service agreements, training costs, additional warranties, implementation, and extra hardware or software required in your “investment” amount. And keep in mind your revenue amount can be more than just a dollar figure. There can be intangibles that should be accounted for, such as: increased productivity, improved morale, staff reductions, and increased brand recognition/word of mouth exposure/referrals.
Just because something doesn’t have a monetary value, doesn’t mean it should be left out. And a lack of a dollar value doesn’t mean that measurements should not be taken. Make notes in your ROI calculation that shows the intangibles are not included but are counted.
Finally, the ROI amounts can be stretched this way and that to show whatever favorable results you need. The more concrete effects you can demonstrate – along with all the unfavorable details – the better off you and your organization will be. And you’ll make better decisions in the future. Track everything you can from the first day after implementation and review every month, quarter, or year to measure and report on your results.
Examine your ROI at different points in time so you can see the difference of the return for now and again in five years. Create a baseline for your current figures so you can make those future comparisons. Give yourself milestones or benchmarks so you’ll have goals to meet and, hopefully, exceed.
We’re excited about the upcoming INARF annual conference in Indianapolis!
