Return On Investment (ROI) is a financial metric used by businesses to evaluate a particular avenue and make an informed decision about the investment. The article explores the importance of ROI for software selection in every enterprise while adopting a technology solution.
In the digital transformation era, businesses cannot survive without embracing emerging technologies for enhancing their offerings, customer service, and internal operations. Whether it is a company’s CFOs and CEOs aiming to cut costs or the leaders targeting revenue increase, the contribution of technology is indispensable. Hence choosing the right software that best fits the organization’s unique needs and vision is very critical. This puts a lot of pressure on the acquisition team for the best possible software selection while optimizing the investments. In this entire process, the ROI becomes a highly effective guiding light.
For a software product, the ROI metric reflects how profitable is the solution against its cost. It captures a holistic picture of what the benefits will look like compared to the investment required in implementing a particular solution. Naturally, the IT acquisition team would look for a product with a positive and high Return on Investment. It means that the revenue generated with the help of it would be worth spending the required resources. Hence, eliminating bad investments and prioritizing the right options will be easier for the decision-makers with the help of ROI. Some critical points highlighting the importance of ROI for software selection can be stated as follows:
Utilize an Effective Cost-Benefit Analysis
For calculating the ROI, the business must analyze all the tangible and intangible impacts a solution has on the business’s profitability and operations. The vendor’s software is analyzed against parameters such as employee experience, process automation, data security, relevance to the business needs, implementation costs, employee training costs, and effectiveness in day-to-day processes. The result is an effective cost-benefit analysis of each option that the business can utilize while selecting the right software for their needs.
Prioritise what you need and when
This is an important factor to a business must consider while selecting on what technology software to use. It may be the case that the software is highly suitable for a business and may give good returns. However, the business may not be in urgent need of it. Buying the right software at the wrong time would lead to suboptimal allocation of resources when the business can in fact invest those resources on a technology their business processes require a the moment. Since ROI considers all the quantifiable and qualitative aspects while calculating the costs and benefits, this factor can be highlighted beforehand. Hence, the business can prioritise its urgent requirements over the non-urgent ones.
Justify Investment in the Software Solution
With ROI, businesses can decide to invest in a particular solution by offering a clear and quantifiable assessment of the solution and its financial impact on the business. The insights of this metric act as a clear justification for the decision in favor of one particular software.
Thus, Return on Investment (ROI) does not only look into the profitability of a product, but it also evaluates the product and its impact on the business while solving the problem. This makes the ROI metric an extremely critical factor that any decision-maker cannot afford to ignore while making a technology investment decision. Technology investment is a long-term commitment. The right decision will enable the business to reap benefits for the years to come.
ROI Benchmark Report by QKS offers a vendor-neutral assessment of a specific IT product/solution deployment. With a strong emphasis on the quantitative as well as qualitative aspects of technology adoption, it reflects the true nature of a solution. The report includes calculated estimates of Return on Investment (ROI), Total Cost of Ownership, and risks along with aggregated end-user perception of the product. This gives a reliable third-party validation to the product that can be trusted by the technology buyers. Visit the ROI Benchmark Report page or connect with us to find out more.