How to Use the “Value on Investment” Formula to Determine a Technology’s ROI

But what about the subjective costs such as professors having to rewrite their lesson plans and adjust their teaching styles? How many professors will be unhappy with this change? Will the university lose some of their best and brightest instructors to competitive schools that don’t require them to participate in online learning?

Again, the total costs are hard to define as the investment is much more than just the cost of the equipment, software, and marketing. There are also numerous VOI advantages that need to be taken into account such as student desires and expectations for various learning methods, the university’s reputation as a forward thinking institution, and the school’s newfound ability to recruit top-tier students without geographic constraints. In this case, VOI predicts the costs and returns are both higher than ROI would lead us to believe.

Finally, there are many situations where a favorable ROI is nonexistent, but VOI would tell us to proceed with an investment. ROI would show that an investment into collaboration spaces does not provide a profitable return, yet thousands of companies focus their internal corporate strategy on collaboration, flexibility, and knowledge sharing. And that’s one of the main problems with ROI. Organizational strategy is not represented in the calculation. CIO’s, CFO’s, and senior management must understand that intangible assets are just as financially valuable as increasing profits. The ability to attract and retain employees, increase employee goodwill, raise customer satisfaction, and improve an organization’s reputation all indirectly increases a firm’s profitability.

And let’s not forget about the intangible cost of inaction. Just ask Blockbuster and Barnes & Noble if ROI’s suggestion to stay status quo when Netflix and Amazon were using VOI analysis to gain a competitive advantage.

—Bill McIntosh, President and CEO of Synergy Media Group and BrightTree Studios
Bill McIntosh is recognized as a Top 40 CI Influencer Under 40. His design-build audiovisual firm, Synergy Media Group, is renowned as a “Top Five Higher Education Integrator” in the US in 2013 and 2014. Bill holds a MBA from Carnegie Mellon University.