Friday, July 31, 2015

Dividing what's left: IT project ROI

A common stat thrown around the industry is that 75% of IT resources go to maintaining the status quo. It's a testament to the mission critical nature of IT in the enterprise—new technology is great, but you've got to keep things up and running


, first and foremost. This makes prioritizing IT projects critical, and a common bar for comparison is the ROI calculation.

The basic ROI calculation divides the net return from an investment by the cost of the investment. Simple right? Not at all. It's easy to oversimplify the calculation with broad generalizations of return or miss important cost considerations that shave away at the ROI. Sometimes benefits might be attributable to more than one factor, so you don't want to double-count.

At Uplogix, we know that vendor-provided ROI stats are taken with a truckload of salt, so we always encourage potential customers to run their own numbers. We also know that this kind of internal information can be highly competitive in nature, but occasionally we have customer that shares some of their calculations with us. It's useful to us especially to share (anonymously, of course) with potential customers to point out some of the factors that others weigh into their ROI.

For companies administering their own networks, quantifying downtime is more than just the infrastructure management costs (both planned and unplanned), but also the opportunity costs of the network being down (again, both planned and unplanned). In this example we’ll use statistics provided by an Uplogix customer that is a managed service provider (MSP), because the cost of network downtime is so clearly articulated by SLAs with their customers. The comparison made was between a site that had a traditional console server (Site E) and a site with Uplogix (Site F) providing both the traditional console access and automated network management that took care of some percentage of their trouble tickets. The data was then extrapolated to a 1,000 site deployment.


Of course, everyone has their own numbers. We tried to create a tool that gives you full control over costs and "fudge factors" to let you get started on your own ROI calculations. Check out the ROI Calculator at uplogix.com/ROI.