I went through an interesting exercise recently that rammed home a point to me - and it has been further emphasised following our article last month defining what makes a successful web project. The point involves return on investment modelling (ROI).

The project I was involved in was fantastic and the planning and strategy effort that went into preparing for a large scale web re-development has laid a foundation for what is shaping up to be not only a market leading project, but also a successful project.

However, it nearly did not happen!! A lot of effort was put into constructing a ROI model as part of the strategy phase to justify the expected cost of development to the Board of Directors; and the model that was constructed was very thorough although too conservative as it transpired. The conservative nature was not the problem though, but rather the model and figures became something very concrete that the Board of Directors hung their hat on, perhaps too rigidly. Rather than appreciating the model for what it was, a model that proved that financially the project stacked up and in fact had more than enough scope for variation to still show significant returns on investment, the model was viewed as a gaurantee of delivery. The expected increases in bookings and decreases in associated administrative overheads were viewed as certainty; more so, than in other times that I delivered similar models for capital expenditure etc. My feedback is that this is actually probably not outside the norm, but rather quite typical of Senior Management who are, no matter how much they are embracing the growth of the Internet as a massive source of revenue, they are still uncertain and wary of it.

The lessons learn’t were accentuated in my recent article which emphasised the importance of attaching real life measurable goals and objectives to any web development project so that such management can embrace the project.

Fortunately, the model we had derived was rooted in a well thought out framework and in the end the interrogation of it drifted toward the numbers and not the model itself - half the battle was won!! And, I am happy to say the project has kicked off thanks to the forward thinking Board of Directors.

Tags: ROI

This entry was posted on Wednesday, May 16th, 2007 at 1:28 pm and is filed under Opinion. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.