“Calculating ROI is harder in the digital age. For example, dismissing wild west investments almost guarantees an established company a slow, controlled demise.
If measuring return on Investment(ROI) used to be difficult, it might be even more difficult in the age of digital transformation.
In the digital world, speed to market is king and the shelf life of a great product or service is much shorter. Mix in some accounting rules around capex versus opex spending, plus the social optics of an investment, sometimes referred to as social return on investments (SROI), and things get complicated real quick. There are many ways to group ROI impact. Let’s break down three of the most common.
Simply put, ROI calculations help determine the best use of a financial resource. For example, if I have two investment options – Option A and Option B – and A returns five percent and B returns seven percent over the period of a year, the math tells me that B is my best option. Historically, companies have had well-defined guidelines around ROI calculations. For instance, any new business investment needs to have a positive return within X months and ROI of at least Y percent. If these two requirements aren’t met, no investment is made. It was all fairly straightforward.”
The article: Digital transformation age ROI: 3 ways to measure