Measuring IT ROI is always a vague part of a CIO’s job – especially when the technology implemented does not directly contribute to an increase in revenue or a reduction in costs.
But do you know what’s even harder?
Predicting ROIs to justify a certain IT spending.
You could be asking yourself the following questions:
How are you supposed to measure IT ROI with the new server that you recently installed?
How do you justify the new productivity suite you recently onboarded, will translate to higher revenue & profits?
What about the new CRM or Document Management System?
The truth is…
often there are many layers between IT & revenue-generation and cost-cuts that has to be removed before attributing ROIs on IT investments.
However, the reality is that tech investments are made so that businesses can either cut down costs or enable new revenue source.
Our COO, Yeoh Kai Hearn, is familiar with the challenges surrounding ROI measurement for IT investments & adapted the popular Lean Manufacturing framework, originating from Toyota. It’s a framework for measuring IT investment ROIs based on the 8 wastages.
But what is waste?
Let us define waste as…
any action or step in a process that does not add value to the customer.
In other words, waste is any process that the customer does not want to pay for.
How can you refrain from having these waste?
Through your IT investments, you see
1/ Technology reduces fraud, waste, and abuse.
2/ When used correctly, inter-department communication will drastically improve, making for a more efficient organization and happy customers.
3/ New data analysis can identify strengths and weaknesses, driving process improvement, lowering costs, and improving ROI.
Let’s dive in and discover what are these wastes?
These 8 wastes are also called: T.I.M.W.O.O.D.S.
This is the movement of items more than required resulting in wasted efforts and energy and adding to cost. Examples are
# Workers in multiple offices needs constant collaboration.
# Movement of files & documents from one location to another.
# Excessive e-mail attachments.
# Multiple hand-offs of documents or files.
This waste refers to holding inventory (material and information) more than required. Such as
# Files waiting to be worked on.
# Unused records in a database, or obsolete files.
# Files and documents awaiting to be processed.
# Having more or less than required servers.
Is the movement of people that does not add value. They can be in the form of
# Walking, reaching to get materials.
# Searching for files, data and information.
# Sifting through inventory to find what is needed.
# Excess mouse clicks.
# Double entry of data.
# Movement of people to and from filing, fax and copier machines.
Employees and customers waiting.
# Waiting for others to respond to an email.
# Files waiting for review/ approval.
# Ineffective meetings.
# Waiting for the computer to load a program.
# Customers waiting to be served by a contact center.
# System downtime.
Processing more than required wherein a simple approach would have done. This are…
# Making extra copies & creating reports no one reads.
# Providing more information than needed.
# Providing a service before the customer is ready.
# Too much paperwork for a process the same data required in number of places in an application form.
# Follow-ups and costs associated with coordination.
# Too many approvals.
Is processing too soon or too much than required. This waste are like the:
# Unnecessary steps in the purchasing process,
# Unnecessary signatures on a document.
# Requiring more forms than needed & Having an extra step in a workflow.
# Information sent automatically even when not require.
# Printing documents before they are required.
# Processing items before they are required by the next person in the process.
Are errors, mistakes and rework.
# Rejections in sourcing applications because of incorrect data entry, spelling or grammar error.
# Accidental deletion of data.
Employees not leveraged to their own potential.
# Insufficient training,
# Poor incentives.
# Not asking for employee feedback.
# Placing employees in positions below their skills and qualifications.
After understanding the different kind of wastes, now what can you do to solve them?
You can solve this with virtual collaborations. Consider using technologies that enables you to work amidst the distance.
Multiples files takes a lot of time and effort to manage, this gets in the way of having accurate inventories. Solve it with a tech that promotes collaboration & easy access.
Eliminate the unnecessary movement with a solution that enables you to access documents wherever you are.
Cut off the waiting game with a solution that enables you receive response in real-time.
Over – processing
Too much steps wastes a lot of your resources, what you need is a solution or technology that gives you the right amount of everything.
Over – production
“Everything that is too much is not good”, there for you should only produce what is enough with just the right amount of resources.
This waste robs you with valuable resources, cut this waste off with solutions that minimizes errors.
Check out the next blog about how to calculate ROI.
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