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Are you wondering when your investment in new technology will start to yield profits? This is an important question for any entrepreneur or manager looking to grow their business. Return on Investment (ROI) is a metric that will help you evaluate the profitability of implementing new technological solutions. Learn more about it.
What is ROI in the context of technology?
ROI, or Return on Investment, is the ratio of net profit to the financial outlay. In the case of investing in new technology, ROI measures the efficiency of spending on implementing and maintaining new solutions.
When calculating ROI, you consider not only the direct costs but also the long-term benefits that technology will bring to your company.
What factors influence the calculation of return on investment? First and foremost, you should define the business goals you want to achieve with the new technology. Are you focused on increasing revenue, optimizing processes, or perhaps improving customer satisfaction? Only after identifying your priorities can you assess whether the investment is worthwhile.
Defining goals and success metrics
Do you want to accurately assess ROI? Define specific metrics that you will monitor after implementing the new technology. These could include, for example:
- increase in sales;
- reduction in order fulfillment time;
- reduction in customer service costs;
- improvement in retention rate.
Choose KPIs (Key Performance Indicators) that best reflect your business goals and regularly measure progress.
Some benefits are a bit harder to measure - such as increased employee satisfaction or improved brand image. However, this doesn't mean they are less important. Try to include these "soft" factors in your ROI evaluation as well.
When does the investment start to pay off?
The time needed to implement the technology greatly affects ROI. The faster you can integrate new solutions with existing systems and processes, the sooner you'll start reaping the benefits. Keep in mind that some technologies require a longer adaptation period for employees, such as when replacing entire CRM systems.
And what about costs? Reducing operational expenses is one of the main goals of investing in technology. Process automation or advanced data analytics allow for optimizing expenses and saving employee time. As a result, the company operates more efficiently, and profits increase. However, it's not worth allocating resources to all areas at once. It's better to focus on those where optimization will bring the fastest and most tangible financial benefits.
Technology also has a significant impact on team efficiency. Communication and collaboration apps, like Slack or Microsoft Teams, are a real blessing for remote work. Thanks to them, information circulates quickly, and projects are completed much more efficiently. The sooner the team learns to use new tools effectively, the faster the investment will start to pay off.
Revenue growth thanks to new technology
Investing in technology opens up new sales channels for your company. A good example is the implementation of an e-commerce platform, which allows you to reach a wider audience. This is an opportunity to increase revenue without the need to open additional brick-and-mortar stores. Technology also allows you to expand the range of products and services.
For one of our clients, we created a new sales channel. Check out the case study of a dedicated e-commerce platform.
Consider an EdTech company. By implementing an innovative online learning platform, it can offer new courses and training, generating an additional source of revenue.
An interesting example is one of our other case study.
How to leverage the potential of cross-selling and up-selling? Analytical tools allow you to better understand customer preferences and offer them specific products or premium services. This is a great way to increase the shopping cart value and build long-term customer relationships.
Realise your development project with us.
Process and cost optimization
Automation is one of the most effective tools for optimizing business processes. Solutions like RPA (Robotic Process Automation) eliminate time-consuming, repetitive tasks and significantly reduce operational costs. How much time will your employees save if they no longer have to manually input data or generate reports?
Technology also speeds up project execution. Many companies use applications like Asana or Trello, which allow for more efficient planning and monitoring of project progress. As a result, your team can deliver products and services faster, which translates into higher profits.
Process automation also means fewer human errors. Imagine a company handling loan applications. Switching data verification and scoring processes to "automation" allows them to speed up service while eliminating costly mistakes.
Customer and user satisfaction
A satisfied customer is a loyal customer—this is an age-old truth, but in the digital era, it takes on new meaning. Chatbots or ticketing systems are a great way to build a deeper, more personal relationship with the customer.
Thanks to chatbots, a customer can get an immediate response to their question, no matter the time of day or night. And ticketing systems not only quickly resolve issues but also gather valuable data on user preferences and behaviors.
What can you do with this data? Here comes personalization - a powerful tool that transforms a regular customer into a friend of your brand. By analyzing this data, you'll get to know your customers' preferences much better:
- what products they like;
- what content interests them;
- what concerns and desires they have.
Based on this, you can create an offer that is exactly what your customers are looking for.
Short-term vs. long-term ROI
When can you expect to see the first effects of your technology investment? It depends, among other things, on the scale of implementation and your team's readiness for change. Operational cost reductions are often visible after just a few months. Revenue growth or improved customer satisfaction, on the other hand, usually requires more time.
That's why it's important to define both short- and long-term technological goals. This way, you can continuously monitor progress and evaluate the profitability of the investment.
Maintenance costs and scalability
Implementing new technology is not a one-time expense. You also need to consider maintenance costs—software updates, technical support, or employee training. Therefore, when planning your budget, account for both startup and long-term expenses.
Some solutions, such as cloud computing, allow you to flexibly adjust resources to current needs. As a result, you pay only for what you actually use, which significantly lowers infrastructure maintenance costs. Scalability also plays a huge role. When choosing a technological solution, ensure that it can support your company's growth. Systems that can be easily expanded and adapted to growing needs will help you avoid costly changes in the future.
Risks and challenges
Investing in new technology always carries some risk. What threats should you be prepared for? Primarily, problems with integrating new solutions into existing infrastructure or employee resistance to change. A good plan and team commitment to the change process are essential.
To minimize the risk of failure, choose proven solutions and trusted providers. Also, conduct a thorough analysis of your company's needs and capabilities - this will help you choose technology that works best for you.
Ensure proper communication, training, and support for employees. Engage leaders who will promote new solutions and help the team adapt to the changes.
Examples of successful implementations
Many large companies have successfully invested in new technologies. A great example is Coca-Cola, which implemented advanced data analytics. With this, the giant increased the effectiveness of its marketing campaigns and optimized its supply chain. Airbus, on the other hand, using Industry 4.0, solutions, automated production processes and significantly increased efficiency at its plants.
In the Polish context, it is worth mentioning Żabka, which is undergoing a thorough digital transformation. Thanks to internal process optimization, the network saved tens of thousands of working hours annually. Implementing a centralized franchisee relationship management system based on SAP solutions improved the company's operational efficiency by 20%.
What contributed to the success of these investments? Primarily clearly defined goals, management engagement, and selecting technologies tailored to the business's specifics. These companies were not afraid of change and consistently pursued the optimization of their processes.
If you want your investment in new technology to pay off quickly, choose solutions that will significantly impact your company's results. Don’t fear innovation, and remember that technology is an investment in the future of your business.
