It may seem that the business world (indeed the entire world) is awash in technology.  Reportedly, 66% of U.S. companies are planning to increase their IT budgets in 2024. As British businessman Phillip Green stated, “Good, bad, or indifferent if you are not investing in technology, you are going to be left behind.” So, are technology investments critical? Yes. Here’s why:

Why Technology Investments Make Sense for Your Business 

It is accurate to say that increasing technology has shaped and is continuing to shape business. The rapidly increasing use of technology helps businesses of all sizes become more competitive, even giving them a competitive edge. But before investing in new technology, it makes sense to evaluate what technological changes have taken place in your industry and what benefits those changes have achieved. Technology helps a business become more agile, including being able to better address changing business conditions and deal with market trends. It helps increase organizational security including coping with the increasing number of digital attacks and data breaches. It helps create better interactions with customers and facilitates improved operational productivity. The increasing use of smart technology simply helps improve business. 

The consequences of not investing in technology include a loss of competitiveness, a decline in innovation, and inefficiencies in business processes. 

Why it is Important to Measure the ROI for Technology Investments 

Return on investment (ROI) is a key means of measuring the value of any major business expenditure and prioritizing all expenditures. Ultimately, every business lives and dies on its bottom line, so all expenses need to be justified. ROI is a performance measurement that evaluates the efficiency of various investments relative to their costs. In the case of technology investments, ROI helps to evaluate their attractiveness and feasibility and then to communicate the results of those investments. The usage of ROI measures facilitates good budget decisions and helps a business plan attainable goals. 

8 Tips for Measuring the ROI of Technology Investments 

Here are 8 tips for measuring the ROI of technology investments: 

  1. Begin by defining the problem or goal that technology will address before deciding to make technology investments. Define your goal and your success measures. 
  2. Create an action plan with a defined timetable and be realistic with the plan and timetable.
  3. Determine the investment impact on the business. This involves identifying all the costs of the technology including hardware and software costs and any operational staffing changes. Similarly, evaluate all the direct and indirect benefits of the technology investments, including productivity and efficiency gains. 
  4. Understand how technology affects your customers (and how many customers it affects.) 
  5. Assess how much new opportunities are worth by acquiring new or additional technology. 
  6. Communicate the numbers of the business with appropriate business leaders across the organization so that the numbers reflect broad and accurate input. 
  7. Be consistent with your ROI analysis methodology across all possible projects or investments that are comparable and measure the results that matter most to you. 
  8. Develop KPIs that finance personnel will use to review technology investments and support the overall business strategy.

Get Expert Alternative Financing Assistance 

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