There is a general belief among Sr. Executives from the Enterprise to Mid to small business, is that ROI’s are very slanted towards benefiting the vendor. They are used predominately as IT investment justifications, and do provide insights bit are not well aligned to the prospect’s financial business model.
SDM believes that executives push back on ROI’s because they lack industry specifics and more so, they tend to not be tightly coupled to the Enterprise’s main issues (free “gifts of Knowledge”), and specifically how the proposed vendor solution cannot just deliver costs savings but innovative new ways to create revenue. Most to not all CEO’s want added revenue and are generally not excited about cost-savings. That is more likely a CFO function and does not quickly deliver shareholder value.
ROI’s are typically seen as benefiting the vendor because of:
- ROI’s from vendors often do not always center on a specific, substantial and critical problem vs. a collective series of issues. They often fail to document that the prospect actually admits to being distressedin needing to solve this specific problem and do it in short-time. They need to admit if they fail to do so, it will result in an intolerable outcome, being lost profits, lost customers or loss revenues, etc.
- ROI’s are unable to prove what guaranteed short-term long-term multi-year benefits will be delivered in revenue dollars, efficiencies, costs take outs, etc. Executives’ prefer to see some measurable gains quickly vs. across a mufti-year plan.
- ROI’s fail to show the value in stages vs. a large single or multi-year buy. Executives prefer to mitigate their risk so they want to see a ROI in smaller pieces across the overall project. In other words, have value delivered across one, two, three stagetimetables.
- ROI’s typically only accounts for the cost of say, implementing the solution or process, or in software, the cost of the licensing and implementation. It fails to cover the full investment with all the moving prices.
- ROI’s often do not substantiate why the company should buy from this particular vendor. It does not make it easy for the executive to look at competitors and make a better, more informed decision.
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