CTO Perspective on technology return on investment

Technology ROI Measurement Spectrum

Return on Investment (ROI) and related topics, particularly Total Cost of Ownership (TCO), have typically been found at one of the two ends of the “measurement spectrum”:

• Entirely facts-based and demonstrable given other cost avoidance and/or enablers of disproportionate scale for minor incremental increases;
• Inferred and arbitrary based on assumptions and extrapolation.

Of course, there is a middle ground and some elements in technology fit into both. 

Let’s use Oho as an example of a case in point to explore some of these areas. Oho is an interesting mixture because, like many contemporary cloud platforms, it offers aspects at both ends of the spectrum and has elements across it.  

Technology ROI Benefit Groupings

The typical benefit groupings associated with technology include: 

Cost Avoidance 

Contributing directly to ROI against the subscription/purchase costs.

Demonstrable administrative effort can be saved through Oho’s automation, ensuring that HR and admin teams can focus on more complex activities including recruitment; staff management and HR compliance; than tracking accreditation validity and currency themselves.

These include time and skills intensive things like staff engagement, workforce allocation, mentoring, and performance management.

Some organisations we’re aware of have teams of 3-6 or even more people manually managing all these items, which could be reduced significantly through leveraging the Oho offering. 

Improved Compliance and Data Quality 

Both Improved Compliance and Data Quality contribute to lowered risk on insurance claims, negative brand impact, and more. 

Peace of Mind

This is especially true for larger organisations “at scale” – certainly where a workforce of 200+ (let alone 2000 or more) needs multiple credentials verified.

From recruitment and ongoing service — it is being able to demonstrate that compliance level, data integrity, and accuracy to boards and leaders who now have personal exposure when a company is remis in their safeguarding responsibilities. 

Manual Effort Avoidance 

Seamless and Effective Integration – contributing to streamlined processes and “the system overall” being more significant than the sum of the parts. 

Data Integrity

Reduction in duplicate data handling, manual manipulation of data or risk of fraud. The human factor can be removed from these often-menial data orientated tasks where manual decisions are not required. These all help build scale for an organisation and consistency in processing.

This, in turn, will reduce hidden costs like training and upskilling, complex induction and handover, or loss of knowledge and lack of awareness of processes is no longer being performed as people move out of the roles responsible for ensuring these things happen as it “walks out of the organisation”.

Even improved consistency in processes between and across different accreditation types all reduce people’s efforts and ensure fewer exceptions and variations. 

Revenue Increase

And for completeness: Revenue Increase. Note that in technology, there are areas that can enable revenue increase.

Some notability would include predictive analytics, used to up-sell and cross-sell for products; customers propensity targeting based on preferences, places of interest, online behaviour and more.

Technology to bolster the brand reputation

This is also an interesting ethical space, as we have seen in society how social media platforms target content provisioning into “feeds” and play to at least some confirmation bias. More on that another time.

In our example, Oho is unlikely to directly contribute to a service provider’s revenue. However, it certainly can help bolster the brand reputation based on the diligent automation of compliance to ensure that the likelihood of brand impact through negative press etc., is reduced or avoided.

A Technology Return on Investment Example

Different accounting buckets are another challenge. IT costs (for projects and subscriptions) are often considered a “cost centre”. When budgets are squeezed (as we have seen through COVID), these “costs” are often the ones that are scrutinised and cut first – sometimes with risk-based calls.

Interestingly, the salary costs of people doing “mundane” and repetitive work are not considered as readily for optimisation. Technology automation can provide actual game-changing cost saves, with a fraction of the value being increased in the budget in one area for a significant saving in another.  

Let’s run a hypothetical example. Say there is an organisation with 2,000 people and a churn rate of 5% in staff (so relatively stable) but growing at 10% in service delivery workforce (be they volunteers or paid employees) annually.

That means there are 15% new people (300 each year). Plus, the need to manage renewals of those who expire (say for a 3-year validity means one-third is superseded each year – so ~630).

Then, consider recruitment screening activities for the new roles that don’t offer – let’s say that 3 for each position – therefore 300 * 3 = 900).

So, there are 300+630+900 accreditation checks (for every given type, not just one type), totalling 1830 new checks a year or an average of 7 per day. And that’s before any checks to ensure ongoing currency of the now 2000 “stable” accreditations – so now 13 per day.

While Oho cannot chase people who have provided incorrect or incomplete information, it can focus the admin staff’s time on those that are not validating, have become invalid, expired, or for other reasons. It’s easy to imagine that someone could spend half their time chasing all that down.  

Tech ROI in Dollars

So, say that the admin person gets paid (a conservative estimate of) $75k per annum (noting the average full-time wage is ~$90k). And, half their role is consumed chasing these items, or $37k. Now for 2000 people, the Oho subscription is $15k per annum. So, on the surface, we’re comparing $37k with $15k. Straightforward, right? Well, not so fast.  

• It’s hard to release a fraction of a person’s role (unless they want to go part-time) and note that not all the data capture tasks can be removed (although through integration to HR and recruitment systems, many can be).  

• It’s also tricky sometimes because doing this may increase spending in one area of the budget (or try more measurable financially) whilst not consistently reducing another area. One key question is – is the organisation better off overall? Even if the line items and cost centre allocations have shifted? 

Technology as a Facilitator

What is true is that software like Oho can either be a facilitator to refocus responsibilities that may release a role – either to leave the organisation or more likely – be allocated to more complex and nuanced tasks, also delivering greater job satisfaction to the individuals. 

So, we can see here that measuring benefits in these areas isn’t always straightforward. There are ways to draw calculations on benefits from technology spending, and many times they can be multiples of benefit return if organisations are willing to consider a broader perspective.