Technology Return on Investment for NP's

[Preface: As CTC VISTAs, our purpose is not as clear cut as a non-profit technology consultant. We can't throw around business school terms and expect our organization's staff to understand and have the desire to do business planning. But the concepts behind this presentation could be very useful in creating a well thought out case for implementing a new technology project at a small non-profit. Here's some notes from a session at the NTEN NTC 2007, "The ROI Question: Demonstrating the value of technology to your organization", by Bill Strathmann, Chief Executive Officer, Network for Good http://www.networkforgood.org/.]

FUN FACT! only 1/3 companies calculate ROI on IT investments!

Return on Investment (ROI) is financial and non-financial investments and returns; the big problem with np's is that their returns are often hard to measure and they lack of earnings per share. In laman's terms, ROI is "what do you have to give and what do I have to give you back."

[Check out http://www.odellion.com - for more on ROI equations.]

Investments:

• hardware/software
• staff/contractors
• training
• maintenance
• *change in business processes* - one-time hitch in productivity

All of the above incorporate one time vs. ongoing costs.

If you want to get fancy, you can calculate the Net Present Value, which includes change in value over time.

RETURNS:

Wikipedia defines the "return" in ROI as "...the monetary amount of gain or loss. ROI is the return on a past or current investment, or the estimated return on a future investment." You can put your returns in a balanced score card / big yellow square diagram, that includes 4 areas: people, service quality, flexibility (ability to adapt to the market changes), and economics.

But it might be easier to think about it in terms of 3 Basic Measures of Returns:

Here's some steps for Business Case Development:

1. Know your audience...who is your ED or the decision makers?
2. Create a basic description of your proposed projects
3. Throw the projects on an 2 axis diagram, by Priority/Impact and Investment/Difficulty to Implement on a scale from 1 to 10.
4. Figure out the best way to articulate to leadership (know your "elevator pitch" & the risk/rewards
5. keep it simple!
6. break it down to cost of doing nothing vs. the cost of making the investment.

Further reading:

Measuring what matters in np's - by John Sawhill and David Williamson
http://www.mckinseyquarterly.com/article_page.aspx?ar=1053&L2=33&L3=95

Good to Great for the Social Sector - Jim Collins