Do you remember when you first started dating? Young love, holding hands, all of that business. You wanted to make sure that whatever you put into relationships, you would be getting back out of it. Did they make you laugh? Did they have a positive outlook on the world? Were they into the same activities as you? Hey, I did say YOUNG love. Or maybe you have kids who are going through this right now. It’s an investment. The same is true for any investment in life, as well as business.
Businesses are in business to make money. But when it comes to projects, calculating the true value of any project with respect to its impact on margin has always been challenging, mainly due to the ambiguity of turning notions into dollar values.
For instance, training employees will improve expertise and productivity, but how does that translate to bottom-line savings or revenue growth? Spending thousands of dollars on automated systems and software is likely to improve work efficiency, but what’s the dollar-value improvement of that efficiency?
Return on investment (ROI) is a key calculation in answering these questions, as well as showing the project value and its impact on the margin.
In a previous post, we talked about how a project-based environment helps companies better project a return-on-investment (ROI). Why is this important? Your customers want to know what their ROI is going to be if they do business with you. And you want to improve project profitability, as well as determine what ROI you are receiving from your own internal projects (when you implement Microsoft Dynamics 365 for instance ?).
So what is Project ROI? It’s an indicator used to measure the financial savings/gain (or loss) of a project in relation to its cost. Typically, it is used in determining whether a project will yield positive financial benefits, and in turn giving approval to proceed. In six sigma, the formula is:
Project ROI = ((project’s financial gain or loss – project’s cost) / project’s cost)) X 100.
Velosio has two products for companies who need project management, both based on Microsoft Dynamics 365: AXIO for larger, enterprise companies, and Progressus for small and medium sized businesses. Both products help you predict, manage, and track ROI.
AXIO helps you run your business and projects more effectively with enhanced resource management, invoicing, accounting, revenue recognition, collections, contract management, project budgeting and beyond.
Progressus monitors ROI every step of the way from project setup, budgeting, resource management, cost tracking, and time and expenses.
Let us know how we can help you measure ROI, and if you have any questions.
Chief Solution Strategist, Velosio
Robbie Morrison has spent nearly 20 years helping customers build and deploy elegant technology and business solutions. From start-ups to enterprise-class organizations worldwide, his knowledge of the Microsoft Dynamics ecosystem and products helps Velosio customers maximize ROI on technology investments.
Today, Robbie serves Velosio customers in his role as Chief Solution Strategist where he provides thought leadership and manages the development of B2B solutions. Robbie received his MBA from the University of Georgia, Terry College of Business.