CIO & LEADER-Issue-01-April 2018 (1)
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FACE OFF<br />
// Is ROI becoming<br />
outdated for technology<br />
investments?<br />
For years, IT leaders have treated<br />
Return on Investment (ROI) as<br />
testament of a successful IT initiative.<br />
For most <strong>CIO</strong>s, realizing a hard ROI<br />
wasn’t always easy and it wasn’t<br />
necessary that every implementation<br />
had to result in a profit or a loss. In<br />
many cases, companies or <strong>CIO</strong>s can<br />
find that there isn’t any significant<br />
or tangible ROI associated with an<br />
implementation. These limitations can<br />
result in professional embarrassment<br />
for the IT leader.<br />
Over the years, businesses have<br />
gradually realized the importance<br />
of strategic investments without<br />
expecting any considerable tangible<br />
gains. In the digital era, however, the<br />
return on technology investment is<br />
calculated unlike the standard way of<br />
estimating ROI.<br />
Take for instance; value over<br />
investment (VoI) is more of a pay per<br />
Quick View<br />
Ajay Kumar Meher, says, in<br />
the age of digitalization, ROI is no<br />
longer calculated the same way it<br />
used to be earlier<br />
use model. So, organizations<br />
today are paying based on<br />
their usage of a technology,<br />
and replacing it with a<br />
superior option in case<br />
they get a better or cheaper<br />
technology at any moment<br />
Ajay Kumar<br />
Meher<br />
SVP & Head, IT<br />
& Post Production,<br />
Set India Pvt. Ltd.<br />
of time. With the easy exit<br />
option available, these investments<br />
are broadly driven by ‘value’ of the<br />
investment rather than ‘return’<br />
on investment.<br />
The other type of ROI that digital<br />
organizations are investing in today<br />
is known as futuristic investments.<br />
These investments are made primarily<br />
to build the digital backbone of<br />
an organization, and to enable<br />
business. Business enablement-based<br />
investment in digital technologies<br />
such as machine learning, Robotics,<br />
big-data or IoT, can result in revenue<br />
growth opportunities.<br />
The purpose of ‘building the digital<br />
backbone’- type of investments, is<br />
primarily to strengthen the core of<br />
an organization. This is to say that<br />
organizations should look at this as a<br />
capability enhancement tactic rather<br />
than a ROI based investment.<br />
The truth is technology investments<br />
should be strategic, and not tactical<br />
"The ROI<br />
on tech is<br />
calculated<br />
unlike the<br />
standard way<br />
of estimating<br />
ROI"<br />
20 <strong>CIO</strong>&<strong>LEADER</strong> | <strong>April</strong> 2<strong>01</strong>8
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