* Tactical vs. strategic ROIs
For several years, we’ve been talking about ROI as a key component in business decision-making, and in particular, as a prerequisite for making changes in WAN technologies and services.
But determining exactly what does and what does not get included in your ROI isn’t exactly trivial. Because implementing a new technology can have a business impact far beyond simply “cheaper” or “faster,” we have segmented ROIs into two separate categories – tactical and strategic.
In defining a tactical ROI, we’ll start by admitting that this is what most people would traditionally consider to be an ROI. You look at your costs before the investment, you look at the cost of the investment, and you look at your costs after the investment. However, you do not consider any enhanced capabilities. Rather, it’s simply looking for a less expensive method to do what you’re already doing.
The good news is that with a tactical ROI, it’s easy to identify the parameters. For example, making the move from traditional leased lines to frame relay was, for the most part, a tactical ROI. The capabilities, while slightly different, did not fundamentally change. You mostly saved money.
But the bad news about a tactical ROI is that many of the better and more important new technologies do not readily show a strong tactical ROI. That’s because the enhanced capabilities are not considered as an added asset, so the added value from the investment is not shown.
Next time we’ll consider the impact of strategic ROIs.
* There is an excellent tutorial by Jim at Webtorials on how to calculate an ROI. And even though the example used in the presentation is a bit dated (justifying enhanced DSU/CSUs for frame relay service), the methodology remains sound.
