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ROI-focused IT Strategy

Updated: Aug 15, 2023

Before the Break: Thursday Thinkers

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ROI-focused IT Strategy: Ensuring Value Creation and Sustainability

In today's fast-paced digital era, businesses are constantly on the lookout for strategies that not only streamline operations but also ensure sustainable growth. One such strategy that has gained immense traction is the ROI-focused IT strategy. But what does it entail, and why is it crucial for businesses today?

The Changing Landscape of IT ROI

Traditionally, IT strategies were primarily centered around cost reductions and increased efficiency. However, as organizations delve deeper into digital transformation, the metrics for IT success are evolving. Business leaders are now seeking more than just cost savings from their technology investments. They're looking for increased revenues, profits, and differentiated customer experiences.

Digital transformation isn't just about enhancing IT initiatives. It's about transforming the entire business into a more responsive and competitive entity. As Cecilia Edwards, a partner at Everest Group, points out, cost efficiency is now seen as a given and not the primary goal. In some instances, IT might even need to shoulder increased costs to introduce new capabilities or efficiencies in the business.

The Metrics That Matter

With CEOs holding technology leaders more accountable for business results, measuring ROI in innovative ways becomes imperative. Here are some essential metrics for IT leaders:

  1. Strategic Impact Metrics: These include revenue growth, lifetime customer value, customer acquisition costs, customer retention, and time-to-market for new products or services.

  2. Operational Impact Metrics: Relevant metrics here encompass productivity improvements, increase in scale, and operational efficiencies.

  3. Cost Impact Metrics: These involve business costs, total cost of ownership for business and IT assets, and reduced IT operating costs.

The Role of Business Owners

For a successful digital transformation, business owners need to be actively involved. They should not only create the business case for transformation initiatives but also take ownership of their delivery. David J. Castellani of New York Life Insurance Company emphasizes the importance of a detailed cost-benefit analysis for any project seeking funding. Projects with the highest ROIs often get prioritized.

The Bottom Line

Incorporating an ROI-focused IT strategy is no longer optional; it's a necessity. As businesses continue to navigate the complexities of the digital age, having a clear, ROI-driven approach can be the difference between mere survival and sustainable growth.

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