[READ TIME: 3 mins]
Rethinking ROI
Everyone has heard of ROI – Return on Investment. Every business case has some calculation that shows that the project will have a positive ROI. Once the project has been signed off and the software purchased, then the ROI is often forgotten. No one is there monitoring the return from the project to ensure that the benefits are realized.
But with low cost cloud-based applications and particularly the low-code platforms and their ability to support very iterative development, there is suddenly a new opportunity to turn the ROI calculation on its head. And at the same time reduce the risks because the levels of investment are so much lower.
Before it was a 1-2 month cycle, at minimum, to get from step 3. “pay for software” to step 8. “get benefits” below:
- build and present business case
- purchase software
- pay for software
- recruit and train development team (or outsource)
- develop detailed specification
- develop application
- implement application
- get benefits
Now that is very different, and the entire cycle could be days:
- identify business need
- signup for software
- find business users with discretionary time
- build & implement application in short sprints
- get benefits
- pay for software usage
- back to 3, rinse and repeat
RBI not ROI
Have you noticed something? Step 6. “pay for software” comes AFTER Step 5. “get benefits”. Hence my term RBI – Return BEFORE Investment. Clearly there is an internal investment of time, but some of this is discretionary time by enthusiastic business users – citizen developers – so essentially free. But the other interesting thing is that the hours building business cases to present the ROI to investment committees disappears. If there are benefits they will be identified very early with the new approach of small incremental developments. Each new development will fund itself.
1000% ROI
So now the cost side of the ROI equation is way lower and the benefits can flow more quickly. So how big an ROI can a project deliver? I believe that the low-code revolution can unlock some huge benefits in that long tail of apps (in the image below) that the business want built, but IT are too busy to get to. I think that we will be surprised and I am out there looking for the unicorn ROIs. – the 1000% ROI projects. We should be seeking out and celebrating these 1000% ROI projects and their teams. But more of this later.
