Ajay Kumar Meher, SVP & Head - IT, post production and new media - Sony Entertainment Television on whether ROI becoming outdated for technology investments?
For years, IT leaders have treated Return on Investment (ROI) as testament of a successful IT initiative. For most CIOs, realizing a hard ROI wasn’t always easy and it wasn’t necessary that every implementation had to result in a profit or loss. In many cases, companies or CIOs can find that there isn’t any significant or tangible ROI associated with an implementation. These limitations can result in professional embarrassment for the IT leader.
Over the years, CIOs have gradually realized the importance of strategic investments without expecting any considerable tangible gains. In the digital era, however, the return on technology investment is calculated unlike the standard way of estimating ROI.
Take for instance, value over investment (VoI), which is more of a pay per use model. It is a known fact that organizations today are paying based on their usage of a technology, and replacing it with a superior option in case they get a better or cheaper technology at any moment of time. With the easy exit option available, these investments are broadly driven by ‘value’ of the investment rather than ‘return'.
The other type of ROI that digital organizations are investing in today is known as futuristic investments. These investments are made primarily to build the digital backbone of an organization and to enable business. Business enablement-based investment in digital technologies such as machine learning, Robotics, big-data or IoT, can result in revenue growth opportunities.
The purpose of "building the digital backbone" type of investments, is primarily to strengthen the core of an organization. This is to say that organizations should view such investments as a capability enhancement initiatives rather than ROI based investment.
The truth is technology investments should be strategic and not tactical. These strategic investments need to be long-term, but if they are driving on a tangible ROI or any other financial based decision, they lower the importance of such investments.