How to measure RoI from your technology projects
“You can’t manage what you don’t measure.” – Peter Drucker
HSOs Director of Implementation Services, Adrian Blake, believes there’s a common reason most technology projects begin “It’s a fear of losing business; of falling behind. That is normally the trigger to beginning a project, rightly or wrongly.” However, a 2019 report by CIO magazine found that 55% of businesses had an IT project fail. Reasons cited included poor project management, 54%; lack of business ownership, 21%; a skills gap or resource constraint, 14%; unaligned method 8% and technicality, 3%. This indicates the importance of project management. But are these results flawed, and if so, why?
The report looks at projects from a delivery perspective. The actual plumbing in of the technology itself. And this does indeed constitute a good point of success. Yet it is only one step. If, for example, you have successfully deployed your new Dynamics 365 ERP, is this a guarantee of return from your investment? No, of course not. It’s for this reason 75% of ERP projects fail. Because the solution is not aligned to the objectives of the business and as such is unable to help meet the goals for which its capabilities were sought. It’s only when the solution begins delivering business value – a change that delivers positive outcomes – that it is a true success. So, what does success look like?
Revenue, growth, and efficiency
These are the three things’ people at the very top of your organisation care about. Perhaps, in yours, it’s just one of those things. A Local Authority, for example, cares very much about reducing cost of citizen service delivery without impacting quality. A retailer expanding their digital offerings seeks growth in customer numbers and revenue. HSOs Blake puts this succinctly: “A major driver of success is scalability. The ability to grow your business with the same number of resources.”
The success of your own technology project is likely aligned to one of these objectives. If it’s not, once the euphoria of project kick-off wears off, inertia will quickly set in as teams try to work out the alignment against business objectives. You then run the risk of creating more problems, and work, than you wished to solve before you began the project. To land with the best chance of uptake, start by identifying the business problem you wish to solve.
Know the desired outcome from the start
Begin with the strategy and big business challenges or questions first, and then decide the direction the project should take. Once you have direction and purpose, mapping success metrics at the end is far easier and avoids an issue HSOs Blake has found time and again “when a company does get a system they believe will meet an aim, they’re not able to measure the numbers, or they can’t trust them. They find themselves comparing apples with pears.”
Defining what success looks like from the start, and how to measure it, is key. Consider the original goal, for example, to grow the business internationally. As difficult as this might be to achieve, measurement is relatively straight forward – what percentage of revenue can you now attribute to overseas sales. Should you wish to expand the business without increasing the number of resources, measuring the change in revenue against cost is an indicator of success.
Measuring success works on a more granular level too. If you’re a retailer, successful measurement of your technology project may be to do with improving efficiencies in stock availability, reduced number of back-orders, number of people picking, number of pick fails and so on.
Auditing progress against pre-set KPIs help keep implementations on track. Tools such as Power BI can help analyse the numbers coming through the new systems, to visually and show change. If you want to know if you’ve achieved desired efficiencies, measuring the value of sales orders, or the number of picks vs the number of people, helps provide this insight. But to ensure your project is a success, you will need one more thing. You need an anchor.
The glue to keep your project ticking along
Once you know the project aims, have selected your technology, and agree what success looks like, you will need a strong team to help keep the project on track. Because, once again, successful technology projects come down to people. And Blake believes there are roughly four groups of people who act as the anchors to success: “It’s important to have strong executive sponsor inside your business. A good project manager to keep things moving along, able to connect the technical solution to business requirements. Someone with strong technical know-how who is a real problem solver. And, of course, the right partner to support and guide you.” Or as Blake puts it: “Sticking to the knitting.”