Measuring Return on Technology Investments Is Hard Work

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Measuring Return on Technology Investments Is Hard Work

9/1/2004

By Peter Stokes

...but the rewards should be worth it.

There is an old saying in business, “What gets measured gets done; what gets rewarded gets done repeatedly.” Unfortunately, there appear to be few rewards to encourage college and university administrators to examine, in a deep way, the financial returns on their technology infrastructure investments. Instead, these investments are frequently talked about in terms of their intangible value: “We want to have a leading IT program,” or “We need a more coherent campus infrastructure,” or “We are trying to reduce complexity.”

Worthy goals, all. But too little attention has been paid to the tangible consequences of implementing large-scale business process solutions like student administration systems, human resources systems, or finance systems. Why is there so little motivation to examine financial or other “hard” returns?

The answers, of course, are numerous. First of all, getting a handle on the precise costs of these systems—even in terms of purchase and implementation outlays alone—can be difficult, partly because projects of this type can take so long to deploy. Also, while total cost of ownership calculations may sound reasonably direct in the sales pitch, it can be challenging to put a boundary around “total cost” out there in the real world. Plain and simple, if you cannot measure the investment, it is going to be hard to measure the return.

For this very reason, return on investment (ROI) is sometimes treated—by providers and consumers alike—as a mere marketing term, and not as something to be taken seriously. In fact, the higher education marketplace is so keen to retreat from the idea of setting financial efficiency or gain as a legitimate management goal in the context of large-scale technology investments that nowadays the dialogue around returns is awash in still foggier—and comfortingly less transparent—notions such as “value,” rather than return, on investment.

However, because enterprise resource planning (ERP) solutions remain a top concern for CIOs and other higher
education administrators—even as college and university budgets tighten—it will only become more important for education leaders to learn to effectively measure the benefits that their technology investments yield.

Show Me the Money

Benefits can be divided into “soft” and “hard” categories. Among the “soft”
benefits are business process improvements in operational management and the delivery of services to students and staff, such as: