Measuring the ROI of choosing Flex for Enterprise RIAs

we make it RIA Raffaele Mannella – managing director [email_address]

Measuring the ROI of choosing Flex for Enterprise RIAs How to estimate the benefits and the final Return on Investment of adopting Flex to develop or re-design Rich Internet Applications to be used by the internal staff of a company 360Flex Conference Milan 7- 9 April 2008

Enterprise applications: a definition -the “walled garden” of enterprise RIAs Evaluating the benefits of an IT project -why evaluating Benefits -ROI and BCR as a final criterion -ex post evaluation and forecasts: different purposes -tangible and intangible benefits: collecting hard and soft data -be conservative, be credible! What is the impact of Flex impacts on the ROI numerator impacts on the ROI denominator A worked example Agenda

Enterprise Rich Internet Applications In this presentation the term “Enterprise RIAs” refers to RIAs to be used by the internal staff of an organization to perform the operations Possible ent.RIAs are: CRMs, ERPs, salesforce automation platforms, banking operations platforms Definition

The “Walled Garden Syndrome” of enterprise RIAs caused scarce availability of data, examples and case histories However, as the ROI methodology synthesizes in one index only all a series of “sensitive” data, its disclosure is often accepted by companies Data availability

Why should we make the effort? (Ex ante & ex post): deciding feasibility, comparing alternative solutions, reduce uncertainty, lower expenses but most of all: promoting our RIA project in such a way that it results credible and reliable to senior managers! Why evaluate

The ROI as a “final” criterion ROI is a powerful methodology to synthesize in one indicator a structured and complete analysis of benefits and costs. ROI (%)= Net project benefits/Project costs x 100 Benefits Cost Ratio (BCR) = Project benefits / Project costs ROI & BCR

Evaluating the benefits Measuring vs. forecasting Ex post evaluation: based on ROI measurement system which normally requires 3-5% of project budget; input data are collected in terms of surveys, questionnaires, interviews, on-the-job observation, performance monitoring Ex ante evaluation (forecasting): input data come from past experience, similar projects, internal/external experts, standard values, a PILOT PROJECT

Preliminary questions for ROI methodology applicability What specific aspects have been (or will be) influenced by this project? (identify and isolate by using trend lines, control groups, participants’ estimates, experts estimates) Are those aspects measurable? And, eventually, can the impact data be converted into money? If you get negative answers, do not panic. We’ll see how to manage… Preliminary questions

If you get positive answers, convert output data to monetary values of: Profit contributions or Cost savings by using actual and standard values, wages, historical costs, experts’ estimates, related items Converting outputs

Tangible or hard data The traditional measures of performance: Output Units produced, units sold, # visa processed, etc. Time System downtime, time to completion, efficiency etc. Costs Unit costs, sales expenses, variable costs etc. Quality Scrap, rework, rejects etc. Tangible benefits

Intangible benefits The so called “intangible” benefits Some benefits cannot be easily converted in monetary values: +customer service, +collaboration, +organizational committment, +job satisfaction, +customer satisfaction, -complaints, -conflicts

How to treat the intangible benefits Basically 2 ways: relate them to an easily measurable impact (e.g. less complaints=less people to manage them, higher system adoption=lower error rate) exclude them from the ROI formula calculation but make a list of them Whatever your choice, keep conservative (prudent) and therefore credible Intangible benefits

Cost categories needs assessment business analysis functional requirements system design development/acquisition testing/debugging delivery/implementation evaluation overheads Cost categories

Youthru makes the selection process more effective also for the candidates as it gives them the opportunity to highlight certain aspects of one’s personality and attitudes which cannot be adequately expressed by a textual resume. Calculating the ROI index BCR=1  ROI=0  BEP (BENEFITS=COSTS) In enterprise applications ROIs in the region of 100 to 700% are quite frequent. When a specific need has been identified and a performance gap exists, ROI values can be very high* BEP ROI value *ROI for technology project, Roulstone & Phillips, BH 2008

Real-world Flex case Application: a platform for common banking operations operation executed: depositing a check on a c/a A pilot project revealed these simple data: * Oracle forms (simple html , 1 click=1 page) Previous app.* Flex. app. Measured output: saving # of clicks 17 7 -59% Execution time (sec.s) 25 11 -56%

Alternative “hard” data operations processed clients served new accounts opened Alternative choice of hard data should be based on reasonable assumption, in order to avoid benefits overlapping and double counting. In this case, time saving has been used to quantify the benefit, instead of output data Real-world Flex case

Data collection * a 2-year useful life was forecasted for the application Real-world Flex case Project cost (full cost) € 6,000,000.00 # dedicated operators 400 Cost per hour (full cost) € 20.00 Cost per year € 14,080,000.00 Annual saving € 7,884,800.00 2-year saving* € 15,769,600.00

Youthru makes the selection process more effective also for the candidates as it gives them the opportunity to highlight certain aspects of one’s personality and attitudes which cannot be adequately expressed by a textual resume. Searching for additional benefits Work climate -absenteism -excessive breaks -complaints +employee turnover/retention +organizational commitment +job satisfaction Real-world Flex case

Searching for additional benefits Customer satisfaction +cust.satisfaction index +customer retention - complaints Benefits of this kind, when hardly measurable, are listed among the intangible benefits. However, before doing that, we can evaluate related items… Real-world Flex case

Final calculation BCR=benefits/cost=7,884,800.00/3,000,000.00= = 2.63 ROI=net benefits/cost= 163% Real-world Flex case

Youthru makes the selection process more effective also for the candidates as it gives them the opportunity to highlight certain aspects of one’s personality and attitudes which cannot be adequately expressed by a textual resume. Considerations respect an alternative technology Flex probably represents the best choice for interaction and enhanced user experience, which increase the ROI formula numerator And a formidable alternative to decrease development costs (cross browser testing alone, takes 20% of total development time in ordinary IT projects) Flex impact on ROI

Flex impact on ROI Interactivity features increase both the numerator and the denominator Flex Applications Are More Responsive Flex Delivers Data Visualization with Built-in Charting Controls Flex Delivers Style So that Applications Can Look Cool Flex works both Online and Offline Flex Gives Developers the Power to Deliver Superior User Experience Flex is cross browser* Cross browser feature decreases denominator + net benefits ___________ - Total costs *from Flex 3 Early Evaluation: Assessing Flex and Your Project Needs by EffectiveUI, Inc. © 2007 O’Reilly Media, Inc.

For most organizations, Flex also represents the only option for (reasonable) feasibility (“ It’s taken a Google to produce a truly usable and scalable Ajax application”)* *from Flex 3 Early Evaluation: Assessing Flex and Your Project Needs by EffectiveUI, Inc. © 2007 O’Reilly Media, Inc. Flex impact on ROI

Measuring the ROI of choosing Flex for Enterprise RIAs

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