Oct 082005

There has been and will continue to be much opining on developing ROI formulas for in-house projects built or bought. I think that ROI calculations are merely a method to justify your hypothesis. There is an easier method for determining which projects are winners and which are losers. Think of potential projects in terms of Customer, Users and Management. While not lending itself to any form of speakable acronym, I believe these three categories are the primary indicators for ROI ranked by strength of return. All three must have needs met for a project to have any impact at all. Ignore customers and sales will decline. Ignore users and per employee profitability will decline. Ignore management and none of it will work as management won’t be able to direct it.

Customers: Yes, Customers and Users are different entities. I do not buy in to the “end-users as customers” thought experiment. Viewing your users as customers is taking your eyes off the corporate goal. The corporate goal is to increase profitability, the best way to increase profitability is to increase sales. Anything else is a stop-gap measure designed to prolong the life of a company whose feet are made of clay. My customers are the company’s customers. Customers are the ones buying the company’s products and services. Customers are the ones that matter most. Meeting customer needs is always goal #1.

Will this project:

  • make my customers feel valued?
  • differentiate my company from our competition in the customer’s eyes?
  • make our product/services more useful/valued for the customer?
  • increase my customer’s confidence in my company?
  • make it easier for customers to do business with us?

Users: Users are the employees who directly interact with the project either in terms of feeding it data, responding to its output and acting as a primary link between it and the customer on an on-going basis. For example, if the project is an e-commerce site, then your web management team and customer service reps (CSRs). If the project is a returns/repairs tracking application then your CSRs, Repair Department, Accounts Receivables and Warehouse are your users.

Will this project:

  • make it possible for my users to make our customers feel valued?
  • enable our users to differentiate us from our competition in our customers eyes?
  • allow our users to show our customers how are products can be even more useful?
  • allow our users to serve the needs of even more customers?

Will this project:

  • allow them to monitor and debug our efforts in meeting the customer’s needs?
  • enable our ability to expand our sales by more accurately meeting customers desires and needs?
  • help in recovering lost opportunities?
  • help them utilize resources more efficiently?
  • help them focus their attention on our customers?

In my view – A project needs to answer yes to at least one question in each category for Customers, Users and Management. If a project can not answer yes to at least one question for each then the project is most likely born from a checklist of wants from someone who just finished reading a business article. Customer questions should be given more weight than Users, and Users more than Management. That is how I break a tie between projects. The more wins you have closer to the customer the bigger your financial return.

 Posted by at 4:52 pm

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