If you’re like most people, you don’t want to reflect after implementing a business solution and say, “Well, that was a waste of time and money.” Subsequently, before deploying a new type of technology, you’ll probably find yourself wondering, “Is it worth it?”
While investing in new technologies is essential for any business that wants to stay competitive, the return on investment (ROI) isn’t always obvious. For example, while 74 percent of CEOs agree that artificial intelligence is the technology that will have the most significant impact on their industry, the ROI is “often nonexistent or difficult to showcase,” according to the Q1 2025 Gartner CIO Report.
To obtain support from your company’s leadership and end users, however, it’s helpful to estimate ROI before proceeding with a project, whether you’re implementing generative AI (genAI) or another solution. Considering the costs and benefits of an initiative before moving forward lowers your odds of being one of the 80 percent of technology buyers who, according to Gartner research, experience post-purchase regret.
If you’re an IT director, CIO or other leader, here’s what you should know about calculating ROI for technology investments.
Understanding technology ROI and why it matters
The anticipated ROI of a project is determined before it begins and typically factors into the decision to move forward or abandon the idea, according to Harvard Business School (HBS). Usually, your anticipated ROI will encompass various scenarios and a range of outcomes, supporting risk evaluation and estimation of profitability.
HBS provides the following formula for project managers that want to calculate return on investment: ROI = [(Financial Value – Project Cost) / Project Cost] x 100.
When you’re investing in a complex new technology like AI, however, determining the ROI might go beyond the traditional definition or “hard ROI.” Hard returns on an investment can include the following, according to PwC:
- Increased productivity
- Time saved
- Reduced costs
- Increased revenue
However, PwC advises also considering “soft” returns on investment when adopting AI. These can include the following.
- Better customer experiences (CX)
- Increased agility in responding to new challenges and opportunities
- Enhanced skills retention for data scientists
Best practices for measuring technology ROI
When adopting new technologies, despite pressure to have everything up and running ASAP, it’s vital to take your time and calculate a realistic ROI first, according to TechTarget. Here are some tips to help you set yourself up for success.
- Review your business objectives and identify which ones the project will support.
- Identify your investment metrics (e.g., applications, monitoring tools, project staffing, etc.).
- Determine your value metrics (e.g., revenue, customer satisfaction score, etc.).
- Define a reasonable time in which you expect to experience ROI (e.g., one year).
Common pitfalls in calculating tech ROI
No one wants a failed project on their hands. To increase your chances of success, be sure to avoid these common errors, as recommended by TechTarget.
- Failing to gather baseline metrics early on.
- Not spreading the word about the project to increase adoption and support.
- Rushing to launch the project and not accounting for the time needed to train people and conduct proper testing.
- Opting for the cheapest technology instead of considering the big picture. For example, a solution might be more expensive than others on the market but easier to manage, leading to lower operational costs in the long run.
If you want expert assistance in finding the best technology for your business, the Stratosphere Networks team is here to help. Drawing on over 20 years of IT and telecommunications experience and leveraging the latest market research, we can quickly pinpoint best-in-class solutions that align with your needs and goals. Additionally, we can leverage the world’s most advanced IT decision-making tool to generate detailed comparison matrices and streamline the selection process. Typically, we save our clients dozens of hours they would have otherwise spent navigating complex and constantly changing marketplaces on their own.
Call 877-599-3999 or email sales@stratospherenetworks.com to talk to our trusted technology advisors. You can also jumpstart your tech-purchasing journey with our free assessments.
