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Capturing the Hidden ROI in Applications: Page 2 of 2

Given these situations, is it possible for sites to get their arms around these challenges and improve their application ROI? The answer is yes. Here are several recommended best practices:

Establish application ROI metrics: IT has successfully established ROI for hardware, measuring elements like data center square footage, licensing costs, energy usage, staff time, and so on. It isn’t such a big stretch to also set up metrics tailored for software. These metrics could include an analysis of the total software package—and an evaluation of just how much of the total functionality is being used (e.g., 20% initially—with a goal of 40% by the following year). If the application was developed or purchased to produce competitive advantage through operational savings or increased revenues, targets should also be set with the CFO, sales VP or others.

Include applications ROI as a vendor measurement and evaluative factor: When companies put out RFPs (requests for proposal), they should make it clear to software application vendors that ROI will also be an evaluative factor. One way to establish this return is to set forth a metric in the RFP as to how quickly an organization should be able to uptake the total functionality of the application. This challenges the vendor to provide stronger training and educational support in order to earn the business—and it helps the business avoid the unenviable situation where one year later, executives feel only 1% of the software is being used.

Performing application ROI audits: IT should measure the ROI progress of an application in the same way that it measures the ROI of hardware and the data center. These internal audits of software effectiveness should be conducted minimally on an annual basis. If an application is falling behind on its ROI goals, or if the business has drifted to the point where the applications can no longer deliver ROI, an appropriate deimplementation or exit strategy can also be devised.

There are many factors that can quickly dissuade IT from taking a more comprehensive ROI position on software. First and foremost is the length of the IT project list. In other words, if application ROI is not being asked for, why offer it? Unfortunately, the amount of waste that is accumulating from failing to fully exploit all that a given software package offers for the business is fast reaching a point where businesses cannot afford to keep absorbing it.

“We dedicate an enormous percent of our implementation time to assisting end users with how our business analytics solution can really help them manage their assets better,” said one analytics vendor. “If we didn’t do this, we know that the first thing companies would ask us is to just convert the set of 20-some odd batch reports that they have been using for the past twenty years.”

Clearly, it’s time for IT and the end business to take a more aggressive ROI approach to software applications—and to stop leaving all that untapped functionality on the table.

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