The main objective to investment is to get a return on these investments. The regular way to assess the investment is calculated return on these investments which known as ROI (Return on Investment). In this week we will discuss how the ROI calculated for IBM.
Implementation of Return On Investment has become one of the most intriguing and challenging issues facing the implementation of various activities with the context of using resources in any field. ( Phillips)
ROI for IBM:
At IBM, many issues are driving immense interest in ROI. Stress from senior managerial levels to show returns on their investment, and implementation of various financial commitments, for instance, in technology implementation situations within the IT department, is probably one of the most prominent drivers. Competitive economic pressures has attracted numerous views on how ROI is calculated, necessitating an intense scrutiny of the expenditures. (Phillips , 2011)
The ROI Business case example at IBM meets the requirements of all departments and other important groups. Despite the fact that calculation of ROI at IBM is an intricate process, main strength of this case example is on its accuracy. As claimed by Phillips , “the most challenging aspect of ROI is the nature and accuracy of its development.” Oftentimes, methods used to calculate ROI seem very confusing as they are surrounded by formulas, and statistics that often scare the most talented practitioners . Coupled with this disquiet are the misunderstandings about the approaches used to calculate ROI. Nevertheless, “ROI must be explored, considered, and ultimately implemented in most organizations” (Phillips, 2011).
However, the approach has many tangible and intangible benefits. An effective approach is judged based on “accountability trends”. As such, it has captured and demonstrated effectively the value to be added to the organization. It has helped lower costs incurred in developing and maintaining applications by improving productivity at IBM. Nevertheless, the approach at IBM is weaker on grounds that it provides scanty information on the issue of assigning monetary values, and to the key elements involved in developing it.