How often do you find yourself thinking about how new technology will impact your business’ bottom line? Chances are, you have considered implementing a new piece of technology or two, but you might get stuck on whether or not it will actually be worth the investment. This is where you consider the return on investment that technology will provide, or ROI. Here’s how you can make sure your technology is providing results and what you can do if it doesn’t get the results you’re looking for.
Breaking Down ROI
Return on investment can be simplified as making back the money you spend on implementing a tool or service for your business.
While it’s not very appealing to spend boatloads of capital on new technology, it’s difficult to deny that it’s often necessary for businesses to invest large sums into new hardware or software in order to remain operational. New solutions can be more intrusive on your productivity and time, but you have to think ahead if you want to ensure your new solution is actually going to fulfill the needs of your business. You’re not thinking about the immediate needs of your business so much as the near-future needs as well. That’s what investment is; you want to make more in the future than what you’re spending today.
You’ll have to be comfortable with a little bit of risk, but you should only invest in a solution where you’ve worked to calculate the ROI it can offer. This should help to limit the guesswork involved.
Calculating ROI
Here’s a simple equation you can use for calculating ROI:
ROI = ((Net Gain) / Cost) * 100
Net gain is calculated as how much you spend minus how much you made. For example, you might spend $50 to make $100, and your net gain would be $50.
ROI = (50/50) * 100 = 100%
That’s a nice, shiny 100% return on your investment, or double the money you put in, which is great to see.
Know That Net Gains and Costs Aren’t Always Clear
Net gains and costs can be a bit nebulous, however, and they might need a little more digging to figure out.
For example, you need to consider operating costs, implementation costs, payroll, opportunity costs, and more to get a clear idea of your net gains. These are all tough to pin down, but you need them if you want to calculate the most accurate ROI possible. When thinking about ROI, it helps to imagine it as the amount of time spent or saved, along with the initial cost of implementation.
If all this sounds like too much to deal with, we get it. That’s why CoreTech is here—to help you make the best IT decision possible for your business. Get started today by calling us at (270) 282-4926.
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