Demonstrating ROIfor technology investments

Illinois Digital Government SummitSeptember 30, 201310:45-12:00 (concurrent session)

Greg Wass, State of IllinoisEdward Mann, ViON

Measuring ROI (return on investment)

Initial development/implementation costs, followed by ongoing maintenance costs

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Measuring ROI

Benefits begin to accrue after project go-live; phased project drives faster return

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Measuring ROI

• Breakeven point

• Payback period

• Cost/benefit ratio (over a given time horizon)

• % ROI (annualized)

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ROI for IT projects

1. Benefits include avoided costs, staff reductions, and – most importantly – savings from process improvements for the organization

2. Measure costs and benefits for the entire organization (not just for the IT shop)

3. Prioritize projects based on the ROI to the entire organization

4. Select projects based on a comparison of criticality/value to the business and probability of success (vs. cost/difficulty/risk)

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ROI for IT projects (2x2)

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Probability of success

+

-+-

Don’t fund

Difficult, but high value

Low hanging fruit

Fund selectively

Contingency #1

Project & organization risk

Time value of money

Economies of scale

Contingency #2

Contingency #3

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Examples of IT projects with potential ROI• Consolidation / virtualization

• Private / hybrid cloud

• Utility computing (at some scale)

• Fiber network (e.g., ICN)

• ERP (reduce operating costs, increase revenues)

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ROI is part of a broader, emerging ethic

Budgeting for Results

• For agencies under the Governor

• FY15 budget to include program performance data

• New appropriations process

• Cost per outcome

Social Impact Bonds

• Evidence-based programs

• Result in downstream savings and/or improved outcomes

• Opportunities for public-private partnerships

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Demonstrating ROIfor technology investments

Illinois Digital Government SummitSeptember 30, 201310:45-12:00 (concurrent session)

Greg Wass, State of IllinoisEdward Mann, ViON