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Measuring the ROI of choosing Flex
for Enterprise RIAs
How to estimate the benefits and the final Return on Investment of adopting Flex to develop or re-design Rich Internet Applications to be used by the internal staff of a company
360Flex Conference Milan 7- 9 April 2008
Enterprise applications: a definition-the “walled garden” of enterprise RIAs Evaluating the benefits of an IT project-why evaluating Benefits-ROI and BCR as a final criterion -ex post evaluation and forecasts: different purposes-tangible and intangible benefits: collecting hard and soft data-be conservative, be credible! What is the impact of Flex-impacts on the ROI numerator-impacts on the ROI denominator A worked example
Agenda
Enterprise Rich Internet Applications
In this presentation the term “Enterprise RIAs” refers to RIAs to be used by the internal staff of an organization to perform the operations
Possible ent.RIAs are:CRMs, ERPs, salesforce automation platforms, banking operations platforms
Definition
The “Walled Garden Syndrome” of enterprise RIAs caused scarce availability of data, examples and case histories
However, as the ROI methodology synthesizes in one index only all a series of “sensitive” data, its disclosure is often accepted by companies
Data availability
Why should we make the effort?
(Ex ante & ex post): deciding feasibility, comparing alternative solutions, reduce uncertainty, lower expenses
but most of all:
promoting our RIA project in such a way that it results credible and reliable to senior managers!
Why evaluate
The ROI as a “final” criterion
ROI is a powerful methodology to synthesize in one indicator a structured and complete analysis of benefits and costs.
ROI (%)= Net project benefits/Project costs x 100
Benefits Cost Ratio (BCR) = Project benefits / Project costs
ROI & BCR
Evaluating the benefits
Measuring vs. forecastingEx post evaluation: based on ROI measurement system which normally requires 3-5% of project budget; input data are collected in terms of surveys, questionnaires, interviews, on-the-job observation, performance monitoring
Ex ante evaluation (forecasting): input data come from past experience, similar projects, internal/external experts, standard values, a PILOT PROJECT
Preliminary questions for ROI methodology applicability
•What specific aspects have been (or will be) influenced by this project? (identify and isolate by using trend lines, control groups, participants’ estimates, experts estimates)•Are those aspects measurable? •And, eventually, can the impact data be converted into money?
If you get negative answers, do not panic. We’ll see how to manage…
Preliminary questions
If you get positive answers, convert output data to monetary values of:
Profit contributionsorCost savings
by using actual and standard values, wages, historical costs, experts’ estimates, related items
Converting outputs
Tangible or hard data
The traditional measures of performance:OutputUnits produced, units sold, # visa processed, etc.TimeSystem downtime, time to completion, efficiency etc.CostsUnit costs, sales expenses, variable costs etc.QualityScrap, rework, rejects etc.
Tangible benefits
Intangible benefits
The so called “intangible” benefits
Some benefits cannot be easily converted in monetary values:
+customer service, +collaboration, +organizational committment, +job satisfaction, +customer satisfaction, -complaints, -conflicts
How to treat the intangible benefits
Basically 2 ways:relate them to an easily measurable impact (e.g. less complaints=less people to manage them, higher system adoption=lower error rate)exclude them from the ROI formula calculation but make a list of themWhatever your choice, keep conservative (prudent) and therefore credible
Intangible benefits
Cost categories
needs assessmentbusiness analysisfunctional requirements system designdevelopment/acquisitiontesting/debuggingdelivery/implementation evaluationoverheads
Cost categories
Youthru makes the selection process more effective also for the candidates as it gives them the opportunity to highlight certain aspects of one’s personality and attitudes which cannot be adequately expressed by a textual resume. Calculating the ROI index
BCR=1 ROI=0 BEP (BENEFITS=COSTS)
In enterprise applications ROIs in the region of 100 to 700% are quite frequent.When a specific need has been identified and a performance gap exists, ROI values can be very high*
BEP ROI value
*ROI for technology project, Roulstone & Phillips, BH 2008
Real-world Flex caseApplication: a platform for common
banking operationsoperation executed: depositing a check on a c/a
A pilot project revealed these simple data:
Previous app.* Flex. app. Measured output:saving
# of clicks 17 7 -59%
Execution time (sec.s)
25 11 -56%
* Oracle forms (simple html , 1 click=1 page)
Alternative “hard” dataoperations processed clients served new accounts openedAlternative choice of hard data should be based on reasonable assumption, in order to avoid benefits overlapping and double counting.In this case, time saving has been used to quantify the benefit, instead of output data
Real-world Flex case
Data collection
Project cost (full cost) € 6,000,000.00
# dedicated operators 400
Cost per hour (full cost) € 20.00
Cost per year € 14,080,000.00
Annual saving € 7,884,800.00
2-year saving* € 15,769,600.00
*a 2-year useful life was forecasted for the application
Real-world Flex case
Youthru makes the selection process more effective also for the candidates as it gives them the opportunity to highlight certain aspects of one’s personality and attitudes which cannot be adequately expressed by a textual resume. Searching for additional benefits
Work climate• -absenteism• -excessive breaks• -complaints• +employee turnover/retention• +organizational commitment• +job satisfaction
Real-world Flex case
Searching for additional benefits
Customer satisfaction• +cust.satisfaction index • +customer retention • - complaints
Benefits of this kind, when hardly measurable, are listed among the intangible benefits. However, before doing that, we can evaluate related items…
Real-world Flex case
Final calculation
BCR=benefits/cost=7,884,800.00/3,000,000.00== 2.63
ROI=net benefits/cost= 163%
Real-world Flex case
Youthru makes the selection process more effective also for the candidates as it gives them the opportunity to highlight certain aspects of one’s personality and attitudes which cannot be adequately expressed by a textual resume. Considerations respect an alternative technology
Flex probably represents the best choice for interaction and enhanced user experience, which increase the ROI formula numerator
And a formidable alternative to decrease development costs (cross browser testing alone, takes 20% of total development time in ordinary IT projects)
Flex impact on ROI
Flex impact on ROIInteractivity features increase both the numerator and the denominatorFlex Applications Are More ResponsiveFlex Delivers Data Visualization with Built-in Charting ControlsFlex Delivers Style So that Applications Can Look CoolFlex works both Online and OfflineFlex Gives Developers the Power to Deliver Superior User ExperienceFlex is cross browser*
Cross browser feature decreases denominator+ net benefits
___________
- Total costs*from Flex 3 Early Evaluation: Assessing Flex and Your Project Needs by EffectiveUI, Inc. © 2007 O’Reilly Media, Inc.
For most organizations, Flex also represents the only option for (reasonable) feasibility (“It’s taken aGoogle to produce a truly usable and scalable Ajax application”)**from Flex 3 Early Evaluation: Assessing Flex and Your Project Needs by EffectiveUI, Inc. © 2007 O’Reilly Media, Inc.
Flex impact on ROI
