April 18, 2021

The need to integrate the adoption rate into the ROI calculation

By Patrick Chabannes

The ROI exercise is a necessary part of budgeting, but it is still a pain in the ass. Make the writing of your own ROI a guarantee of the success of your project by using the ROI at two levers, the Global and the Local, throughout the stages of the project with the end result of adoption by all the players in the value chain in question and even beyond.

The adoption rate, the key factor in calculating ROI

The well-known equation of ROI=(Gain- Initial Investment)/(Initial Investment) is wrong. Indeed, it does not include the notion of usage rate, assuming de facto 100%. ROI=(Gain- Initial Investment)/(Initial Investment ) × (Adoption Rate) is taken to mean that the main criterion for the acquisition and deployment of business software is its total adoption by the target audience. Indeed, any decline in usage will automatically increase support costs and reduce the value of the information derived from the process, sometimes to zero. As the image of the project deteriorates, the geographical areas on the margins of the centralising influence will regain their power before they have even given it up; local software packages will be installed, resulting in parallel processes with a loss of productivity hidden in the inherent lie of the figures. Theoretical ROI, the marketing material of your Suppliers built with the concept of Best in Class, should of course be avoided like the plague, bringing with it almost the same dangers as all idealisations.

Global and Local ROI, key to adoption

”Balance between local and global. A decentralised system only produces truly intelligent results if there is a way to aggregate all the information in the system.”

In the wisdom of crowds by James Surowiecki, Doubleday 2004

What are these two global and local ROIs? A renewed struggle of Plato versus Aristotle, of the theory of Ideas versus the world of experience? In fact, the two ROIs represent the spirit of geometry and the spirit of finesse, these two complementary descriptions of a real situation :

  • The Global ROI or TOP-Down ROI, integrates the many factors of the value chain highlighting elements of productivity invisible to individual actors. Often very well drafted by consulting firms, it specifies the company’s challenges, the areas of progress and the associated KPIs.
  • The Local ROI or ROI Down-TOP, represents the needs expressed by the operational staff. These requests for process and business improvements, drawn from field experience and requested by and for the operational staff, will create Local ROI, a powerful energy for the success of Global ROI.

Key points to boost adoption.

Invite departments upstream and downstream of the process under consideration; make the alignment of management and operational objectives visible in the dashboards; integrate governance and the appropriation of data by the business; think in terms of needs and then reporting before process; Do not hesitate to separate the teams in order to preserve the potential of collective intelligence, which requires diversity and independence; avoid holding participative workshops with a large audience, which would lead to the over-involvement of the operational staff; favour an immersion study of the way in which the teams work, allowing them to express themselves and the qualitative to be added to the quantitative. Finally, keep all the questions and concerns. They will be the basis for discussions during the RFI and RFQ phases and the implementation workshops.

Global and local ROI guarantee your success.

Allowing to discover, hidden behind the software and the processes, the human being who, with his creativity and inspiration, will be the guarantor of the organisations performance, the Global and Local ROI, process and need, is your best guarantee of success.

In the wisdom of crowds by James Surowiecki, JC Lattes 2004, preface by Joël de Rosnay

Lectori salutem, Patrick Chabannes
“In an age of universal deception, telling the truth is a revolutionary act. G Orwell in 1984.