Do you understand why Return on Investment (ROI) should affect decision making?

Updated by Brook Jeynes [SSW] 1 year ago. See history

123

An important part of communication is to improve the Product Owner's understanding of ROI and help them make good decisions. When you are actioning a task, it's crucial to value your time and think about how much manual time it may consume over a longer period, say a year. You can then go the extra step and quantify this $ cost. If you find out that another solution would be better, then you should clearly communicate that to the Product Owner.

In the software world to calculate ROI we take a PBI and do Business Value ÷ Effort

If the Product Owner still disagrees with you then it may be a good idea to send a 'For the record' email.

From:
Piers
To:
Bob Northwind
Subject:
Email signature - not working

Hi Bob

Done - I have fixed the email signature by changing the file server's HTML and it took me 1 hour.

Thanks!

Piers

❌ Figure: Bad Example - ROI was not mentioned

From:
Piers
To:
Bob Northwind
Subject:
Email signature - not working

Hi Bob

Done - I have fixed the email signature by changing the file server's HTML and it took me 1 hour.

ROI Consideration - As per our conversation, I have to make these changes every month for 12 users. Therefore, for future changes to email signatures, let's wait until I implement the new 3rd party solution I am working on. This will give better ROI because I won't need to do any further wasted work.

Thanks!

Piers

✅ Figure: OK Example - ROI is mentioned

From:
Piers
To:
Bob Northwind
Subject:
Email signature - not working

Hi Bob

Done - I have fixed the email signature by changing the file server's HTML and it took me 1 hour.

...but I will have to do it for each of our 12 users once a month.

The choices:

Option A - Continue manually adding each email signature, every month.

  • Maintenance: SysAdmin x 12 hours x $200/hr = $2,400 per month
  • Total cost = $28,800 per year

Option B (recommended) - Purchase and configure an email signature system.

  • Configure: SysAdmin x 16 hours x $200/hr = $3,200 flat fee
  • License: 1 License fee x $2,000 = $2,000 flat fee
  • Total cost = $5,200 flat fee

Thanks!

Piers

✅ Figure: Good Example - ROI is mentioned and quantified

Note: If fixing the email signatures had been a huge task then it would have been better for Piers to have a conversation with Bob before he implemented the fix.