ROI

ROI (Return on Investment) is a simple way to measure whether an investment was worth it. It compares the value you gained (or the cost you saved) against what you spent. It's usually expressed as a percentage.

The basic formula: ROI = (Gain from Investment - Cost of Investment) / Cost of Investment × 100

For example, if you spend £10,000 on an automation project and it saves you £30,000 per year in labour costs, your ROI is 200% in the first year.

Why ROI matters for technology investments

Every technology project — whether it's building a web app, implementing AI, or setting up automations — is an investment. Calculating ROI helps you:

• Justify the spend: Convince stakeholders (or yourself) that the project is worth funding.
• Compare options: Decide between different approaches by comparing their expected returns.
• Prioritise projects: When you have multiple ideas, ROI helps you start with the highest-impact ones.
• Measure success: After launch, compare actual ROI against your projections.

Calculating ROI for technology projects

Technology ROI isn't always straightforward because the benefits can be:

Direct savings: Time saved, staff costs reduced, errors eliminated. These are the easiest to calculate. If an automation saves 10 hours per week at £25/hour, that's £13,000 per year.

Revenue gains: More sales, higher conversion rates, ability to serve more customers. Estimate conservatively based on realistic projections.

Indirect benefits: Harder to quantify but real — improved customer satisfaction, better data quality, competitive advantage, reduced risk. You may need to use proxy metrics.

Tips for realistic ROI calculations

• Be conservative: It's better to under-promise and over-deliver.
• Include all costs: Don't forget ongoing costs (hosting, maintenance, licensing, training).
• Consider the time value: A project that takes 6 months to deliver starts generating returns later than one that takes 6 weeks.
• Set a timeframe: Calculate ROI over a specific period (usually 12 or 24 months).

If you can't calculate a positive ROI for a technology project, that's a signal to reconsider the approach — not necessarily to abandon the idea, but to find a more cost-effective way to achieve the same outcome.