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What is the ROI of Software Projects?

Return on investment, as traditionally understood, is the ability of capital to generate dividends after recovery of the initial investment.


So, when applied to software infrastructure, what does it mean to generate dividends? When a company makes a long-term investment, it’s vouching for the future. It’s sending a message inward to its employees and outward to its clients that they are in the path of growth, and that the company is equipping itself with better business systems to cope with current and increasing demands.


But, behind closed doors, a different story is cooking. The shareholders demand to know when the investment is going to be translated to the bottom line – to see where and when the benefits will start to grow as a result of the investment.

Benefitting the Bottom Line

The answer is not a simple one, but we have good news. Yes, there will be benefits to the bottom line as a result of having better technology drive the operation, but that’s not enough. The technology improvements will have to be co-joined with several factors, most of which will come from within the organization.


The investment in newer software, increasing computing capabilities, and better systems infrastructure is not enough and will decrease profits if not properly managed. Imagine having a compact car; you have very low maintenance but limited cargo capacity and speed. If you switch to a fleet of newer, better-equipped trucks, you’ll be in better shape – but only if you can haul the trucks in time, find the right drivers, and understand that increased speed and cargo capacity require more maintenance.

Project Considerations

This little parable takes us to several issues to address before, during, and after a technology project takes place. Let’s list them; we’ll be expanding on these subjects in future blog postings:


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This is a non-comprehensive list of tasks that companies should do as part of a paradigm change: the shifting in the return on investment concept to a bigger picture – an infrastructure project that will help the company’s future growth.


Think of a leap forward in technology as similar to acquiring a new building – it won’t bring immediate results, but it will remove factors that inhibit growth and create new tools that will be assets of great value in the future: mobility, scalability, web integration, increased controls, traceability and many more.

ROI of Software Projects

So, at this point, it’s required to go back to the original question: what is return on investment applied to software projects?


The ‘return’ on a typical investment will be the percentage of profit in excess of the costs. It’s not easy to identify the costs because software acquisition, licensing, maintenance, and implementation disbursements will be only a fraction of them. It’s necessary to add the internal, hidden costs of devoting company resources to the project: human resources, time, expenses, and several miscellaneous resources that should be collected to truly assess the cost. Once the cost is determined, the most difficult task of determining the profit starts. What is ‘profit’ on a software project? We’ve seen that it’s difficult, if not impossible, to isolate how new software or new processes will impact the bottom line. But we can use indirect methods to track the benefits and assign dollars to these problems.


Here are some examples:


The real cost of not having these metrics is to keep doing what the company currently does, just with new software. That is really a missed opportunity to assess the organization leanness and, many times, drives the perception of not getting the desired results after the software is live.


To summarize, there’s no right and wrong software implementation – each one is as unique as each company is, and that’s the challenge. But adopting a mindset other than the quick return on investment, one toward the model of acquiring a partner in the software firm that will help the company take on growth challenges is the first step toward a successful implementation. And key measures in strategic areas of the organization prior to go live, at go live, and during each semester will ensure that the investment provides the desired changes in the right direction.


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About Southeast Computer Solutions
Southeast Computer Solutions is based in Miami, Florida, and has additional operations in Mexico. For over 30 years, we have positively impacted the success of small and mid-sized businesses with effective business management implementations that improve our clients’ operations. We listen, we are accessible, and we care. Learn more by visiting our website or calling 305-556-4697.

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