Best practices: Estimate and measure ROI

03/15/2007


Findings show that best-in-class companies are, on average, 88% more likely to estimate ROI (return on investment) before initiating projects and 130% more likely to measure ROI after project completion. As a result, these best performing companies produce, on average, 93% more improvement across a variety of metrics, according to a recent benchmark study from Aberdeen.

Report author Cindy Jutras says investment in ERP (enterprise resource planning systems) and the broader category of EMA (enterprise management application suites), provide many opportunities for ROI calculation in estimating returns and calculating them at the end of the project. However, less than 25% of participants in the study consistently estimate ROI prior to action, and 20% or less measure the actual costs and gains to calculate ROI after implementation. Best-in-class companies estimate and measure ROI, and as a result tend to improve in the areas of cost reductions, schedule performance, headcount reduction or redeployment, and quality improvements.

More on Aberdeen's KPOs (key performance indicators), benchmarks, and best practices can be found on its Website .

Renee Robbins , editorial director, Control Engineering





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