Justifying IT Investments – ROI Part 1

Purchasing an IT Solution

More than ever before, criminal justice organizations are leveraging information technology (IT) to help them address their various challenges and meet the needs of their diverse stakeholders. Utilizing cutting-edge case management systems, for example, help agencies of all sizes:

• Increase flexibility and operational efficiency

• Reduce business process complexity

• Manage costs better

Unfortunately, in the current economic climate, organizations looking to meet stakeholder demands of increased performance have decreased resources with which to do it. Additionally, taxpayers and legislators have become more sensitive about how public funds are being spent, and new spending proposals are carefully scrutinized.

The increased level of red tape that has been introduced to the purchasing process is not unwarranted. In the past, government organizations often implemented new programs and systems without first evaluating their effectiveness. Stories abound of poorly allocated government resources. Several revolve around the now defunct Law Enforcement Assistance Administration, which famously awarded funding to a small town for the purchase of an armored vehicle. The recent failure of a number of high profile government IT implementations has raised additional concerns about the ability of government organizations to properly evaluate IT solutions and responsibly allocate public funds to these projects

Demonstrating ROI

While criminal justice organizations can intuitively recognize the benefits that would come from new IT investments, Congress, governors, state legislatures, and citizens want proof “beyond a reasonable doubt.” Consequently, funding now depends heavily on the ability of courts and agencies to demonstrate a significant return on investment (ROI) for their purchases. Failure to effectively articulate how funding is and will be used to improve business processes can expose agencies to negative publicity and result in reduced future resources.

Many organizations now perform ROI analyses in order to provide stakeholders with justification for IT purchases. ROI analysis requires decision makers to compare an investment’s initial expense with its expected return. Decision makers consider how the investment might reduce costs, increase revenue, and accelerate gains.

The Benefits of ROI Analysis

While assessing costs and results can be a long and arduous process, it is not without its benefits. In addition to justifying expenses to stakeholders, ROI analysis helps criminal justice agencies:

Shorten the purchase process. In-depth ROI analysis can dramatically reduce the time and effort associated with purchasing an IT solution. By demonstrating the impact that technology will have on their business processes, agencies and courts can help decision makers understand the need for the investment.

Maximize public value. Measuring IT performance gives agencies an opportunity to build public trust. By studying the current system and how to improve on it, justice professionals demonstrate their priority to better serving their communities.

Build internal consensus. It is difficult, if not impossible, for an agency to be successful in a new IT initiative without first establishing consensus within the organization. Detailing the benefits of a particular solution can make it easier to justify change to staff members.

Implement product successfully. ROI analysis helps vendors get a holistic view of an organization’s business processes. Establishing this base of understanding is crucial to implementing a solution that will meet the needs of an agency and its stakeholders.

Common Pitfalls

Effectively demonstrating ROI to stakeholders is more difficult and complex than many realize. While attempting to show a return on investment, government organizations can alienate stakeholders if they:

Fail to perform an in-depth ROI analysis: Just “taking a stab” at ROI analysis will fail to provide you with the statistics and facts necessary to convincing anyone who isn’t already on your side.

Assume one size fits all:Presenting the same ROI case to multiple stakeholders, failing to account for different learning styles, or assuming that your audiences will value the investment the same way your organization does will lead to a lukewarm reception of your proposal.

Fail to provide proof of value claims: Taxpayers and legislators are skeptical of ROI claims that don’t have hard numbers backing them.

Keys to Success

The following steps are crucial to successfully proving ROI to key stakeholders. While they are only briefly touched upon here, each point will be discussed in greater detail in upcoming white papers:

Find a Variety of Methods to Demonstrate ROI: Explore all of the ways your solution could provide a return on investment, even ones that might not particularly benefit your organization. The more ways you can demonstrate ROI, the more exhibits you’ll have for your case. This white paper will help you expand beyond the obvious in demonstrating the value of your proposed investment.

Provide Hard Numbers: A successful ROI case not only has hard numbers substantiating its claims, it shows stakeholders how those numbers were obtained in a way that makes sense to them. This white paper will show you different methods for providing statistics and proof to back your ROI claims.

Tailor your Case to Different Audiences: Customizing your argument to the specific values and concerns of your various stakeholders is key to winning their support. This white paper will discuss points to consider when addressing individual audiences.

Demonstrate Continued ROI: An ROI case is far more powerful if it demonstrates that the solution will continue to provide a return years after the initial investment has been made.

Conclusion

While effectively demonstrating ROI to your stakeholders can be difficult, doing so can help justice professionals to build consensus, shorten the purchase process, maximize public value, and avoid accusations of misappropriating funds. To find out more about how you can help your organization effectively demonstrate ROI, refer to the other white papers in this series or contact a New Dawn representative at 1-877-587-8927.