Redefining Tech ROI: Uniting IT and Business Expectations
In today’s dynamic economic landscape, organizations increasingly recognize the critical role of technology in fostering innovation and maintaining a competitive edge. However, not all technology investments yield the desired returns. Some deliver immediate value, while others may underperform or lag behind expectations.
To explore this issue, AWS partnered with TechTarget’s Enterprise Strategy Group to conduct a survey of 1,000 senior IT and line-of-business (LOB) managers across 10 industries worldwide. The study, which you can read in its entirety in the report, “Evaluating the ROI of Major Tech Investments,” aimed to identify which technology investments deliver the highest returns, which underperform, and the underlying reasons for these outcomes.
One of the key findings of this research highlights a significant disconnect between IT and business leaders regarding the value derived from technology initiatives. Despite substantial investments in various technology areas over the past 12 to 24 months, a notable perception gap exists between the two groups concerning ROI. This discrepancy often stems from the level of involvement these groups have in the decision-making processes and the actual implementation of the technology. Those less involved in the investment strategy or the technology’s deployment are less likely to report positive returns.
This misalignment poses a considerable challenge. It makes it difficult to prioritize technologies and allocate resources effectively, potentially resulting in underutilized or ineffective deployments. Furthermore, it can strain relationships between IT and business stakeholders. Bridging this divide is essential to ensure that technology investments support broader business goals and deliver tangible impact across the organization.
Here are some approaches that have proven successful for organizations in aligning decision-makers and maximizing technology ROI:
Establish Shared Goals for Value
One effective approach is for senior stakeholders to establish a clear framework for value realization upfront. This framework can then guide decision-making and future ROI assessments. Adopting a shared framework helps business and IT leaders align on a customer-centric approach that prioritizes customer needs. This framework should also align with overall business value rather than chasing fleeting trends and clearly justifies investment decisions based on predetermined business objectives.
For instance, the AWS Cloud Value Framework offers a valuable tool for mapping tech investments to business outcomes by outlining five key value drivers:
- Cost savings (TCO): Focuses on providing cost savings or avoidance. KPIs might include IT spend and infrastructure spend.
- Staff productivity: Aims to increase output, efficiency, and collaboration. KPIs might include projects delivered and time spent on strategic work.
- Operational resilience: Ensures business continuity during unexpected disruptions or changing conditions. KPIs might track security incidents and unplanned downtime.
- Business agility: Improves operational flexibility and speed to market. KPIs could measure time to market and time to actionable insight.
- Sustainability: Minimizes the environmental impact of operations. KPIs might focus on carbon reduction.
It’s important to note that these value drivers aren’t mutually exclusive. Technology investments can align with and amplify the impact of multiple drivers simultaneously.
Set Realistic Expectations
Many organizations are guilty of setting overly optimistic payback periods for their technology investments, often expecting returns within 7-12 months. This short-term focus can lead to rushed implementations and a focus on quickly realized gains that overshadow the potential for significant long-term benefits. The reality is that many transformative or complex technology investments require more time to mature and deliver their full value.
To establish and manage realistic expectations, it can be helpful to:
- Bring IT and LOB stakeholders together early to clarify objectives.
- Define success criteria together, such as revenue increases and/or cost reductions.
- Build a shared roadmap to be delivered in smaller, manageable phases.
- Take a comprehensive approach to measuring ROI, looking beyond quantitative metrics like revenue and cost reduction to include qualitative benefits, such as improved customer experiences and customer loyalty.
Build Ongoing Consensus
A common gap in technology investment planning is the lack of communication with other leaders in the organization to obtain input on current and future needs. Cross-functional collaboration ensures investments are strategically aligned with business goals and are not just technically sound. To achieve the full value of investments, IT and business teams need to be engaged at all stages of the investment strategy and planning process, from initial ideation through implementation and beyond. This helps clarify business priorities, set objectives collaboratively, make resource allocation decisions, and develop adoption strategies with input from end-users.
Unsurprisingly, the viewpoints of IT and LOB stakeholders may differ throughout this planning process. To effectively build stakeholder alignment, consider the following:
- Building a new social contract: Many decisions are “two-way doors” — those where consequences are limited and reversible. In these instances, rather than getting stuck in a stalemate at Amazon, we use a leadership principle called “disagree and commit” to hear everyone’s perspective and then collectively commit to a plan.
- Empowering rapid decision-making: It’s practically impossible to have 100% of the data at hand before making a decision. Rather than waiting until you have as much information as possible, Amazon leverages the “bias for action” leadership principle, typically acting with about 70% of the data to enable vigorous debate and accelerate decision-making. This approach works well for reversible decisions that require less experimentation.
Invest in Your People
Even the most advanced technology will fall short of its potential if staff lack the necessary skills to utilize it effectively. Without the proper training and support, employees may resist adapting to new technologies, revert to old ways of working, or utilize only a fraction of a tool’s total capabilities. Furthermore, as technology evolves rapidly, continuous learning and skill development become essential. Organizations must foster a culture of ongoing learning to stay ahead of customer needs and competitive offerings.
To maximize the value of technology investments, consider:
- Partnering with vendors to develop customized and comprehensive training programs and self-paced learning options. AWS Skill Builder offers a wide range of programs for builders and executives regarding all facets of the cloud.
- Engaging leadership teams in learning sessions regarding new tools to keep them aware of what’s available to empower their teams or which tools may pose a risk as “shadow IT.”
- Aligning training with business objectives to show how new skills can drive business outcomes. For example, demonstrating how LOB employees can make the most of intelligent assistants by correctly structuring queries to boost both their productivity and that of the business unit.
Implement Continuous Feedback and Adjustments
The business landscape changes constantly. The original rationale for a technology investment may no longer be relevant over time, or the way LOB employees might use certain technologies could change. Alternatively, the needs that a technology was intended to solve may evolve. Maintaining an up-to-date picture of how technology is being used and a mutual understanding between IT and LOB managers is an ongoing journey. To maintain strong alignment across all levels of stakeholders over time, organizations should consider implementing:
- Open communication channels that encourage honest feedback about both the successes and challenges in technology implementation and adoption, particularly from those using the new tools.
- Regular review cycles with managers and senior leaders to assess the ongoing value and alignment of technology investments with business goals.
- Flexible investment approaches that enable resource reallocation based on actual outcomes and changing business needs.
Foster a Culture of Collaborative Innovation
Achieving objectivity and alignment between IT and LOBs is an ongoing process. It requires continuous engagement, open communication, and a willingness to adapt strategies based on real-world outcomes. Prioritizing alignment from the outset enables organizations to make more informed investment decisions, leading to better resource allocation, more effective implementations, and ultimately, stronger business performance.
As technology continues to reshape the business landscape, organizations that successfully bridge the IT-LOB divide will be best positioned to thrive.
For detailed findings and additional insights, explore the complete report on “Evaluating the ROI of Major Tech Investments.”
About the Author
Chris Hennesey, Enterprise Finance Strategist, AWS
As an Enterprise Finance Strategist with AWS, Chris works with enterprise executives globally to share his financial management experiences and strategies for how the cloud can help them increase speed and agility while devoting more of their resources to their customers. Prior to joining AWS, Chris held multiple senior technology finance roles at Capital One.
Chris has a BS in Finance and a Master’s in Business Administration.
