Presentation to 2013 Illinois Digital Government Summit on calculating and demonstrating ROI and business value of IT projects in public sector

1. Demonstrating ROI
for technology investments
Illinois Digital Government Summit
September 30, 2013
10:45-12:00 (concurrent session)
Greg Wass, State of Illinois
Edward Mann, ViON

2. Measuring ROI (return on investment)
Initial development/implementation costs, followed by ongoing maintenance costs
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3. Measuring ROI
Benefits begin to accrue after project go-live; phased project drives faster return
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4. Measuring ROI
• Breakeven point
• Payback period
• Cost/benefit ratio (over a given time
horizon)
• % ROI (annualized)
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5. ROI for IT projects
1. Benefits include avoided costs, staff reductions,
and – most importantly – savings from process
improvements for the organization
2. Measure costs and benefits for the entire
organization (not just for the IT shop)
3. Prioritize projects based on the ROI to the
entire organization
4. Select projects based on a comparison of
criticality/value to the business and probability
of success (vs. cost/difficulty/risk)
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6. ROI for IT projects (2x2)
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Probability of success
+
-
+-
Don’t fund
Difficult,
but high
value
Low
hanging
fruit
Fund
selectively

7. Contingency #1
Project & organization risk
Time value of money
Economies of scale
Contingency #2
Contingency #3
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8. Examples of IT projects with potential
ROI
• Consolidation / virtualization
• Private / hybrid cloud
• Utility computing (at some scale)
• Fiber network (e.g., ICN)
• ERP (reduce operating costs, increase revenues)
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9. ROI is part of a broader, emerging ethic
Budgeting for Results
• For agencies under
the Governor
• FY15 budget to
include program
performance data
• New appropriations
process
• Cost per outcome
Social Impact Bonds
• Evidence-based
programs
• Result in downstream
savings and/or
improved outcomes
• Opportunities for
public-private
partnerships
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10. Demonstrating ROI
for technology investments
Illinois Digital Government Summit
September 30, 2013
10:45-12:00 (concurrent session)
Greg Wass, State of Illinois
Edward Mann, ViON