Is It Time for the Other 'I' (Infrastructure) in ROI?
Everyone knows the traditional decoding of the acronym “ROI” is “return on investment,” and anyone who’s tried to get a project approved knows that’s important. For technology planners, though, there’s an alternate decoding of the “I” in “ROI” that we need to think about: “infrastructure.” Whether you’re building data centers, clouds, or networks, return on infrastructure should be an early focus of your planning, and if it’s not then the traditional ROI may be difficult or impossible to achieve.
Why do we see some industries seeming to embrace automation and networking, applying a big part of their revenue to new technology, while others languish? Do they have smarter management, a better-educated labor pool, or what? Why do some countries offer broadband connectivity at three or four times the speed of others, and at half the price? Better regulations? The answer in both cases is “better economics.”
Return on infrastructure analysis, which I’ll abbreviate here as “RoInf,” is a way of establishing the potential ROI associated with a technology project, computing, or networking. The trouble with ROI is that you can define a project, lay out benefits, get bids, run the numbers, and end up finding out that you’re nowhere near the right answer. Wouldn’t it be nice to be able to decide, before you go to all the trouble of defining project details, whether there’s any hope of getting a favorable ROI? That’s where RoInf comes in.
Let’s start with an automation project in a typical business. The goal is to enhance productivity, right? Then start by asking what productivity is worth, which starts with what’s called the unit value of labor for the various components of your workforce. If you can improve productivity for a worker by 10%, the benefit is worth 10% of that worker’s unit value of labor, which is salary, fringe benefits, etc.
Most companies that use RoInf in planning will classify their workers into groups based on a combination of their unit value of labor and the extent to which their job performance is subject to improvement through automation -- call it “empowerability.” Most companies have four broad classes of workers: executive/managerial, professional/technical, clerical, and manual/production.
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