Published by Thomas Timmermann
Last updated on March 03, 2022
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5 minute read
ROI is the magic abbreviation for any manager: "Return on Investment" is intended to provide a simple calculation that determines the period during which an acquisition is amortized.
Here is a simple calculation using a chewing gum vending machine to make this a little easier to understand:
Some providers include an ROI calculator on their websites. You can enter the size of your company, the number of devices to be monitored, average outage/failure times, sales figures, tax rates, etc., and the calculator determines how many weeks or months it will take to reach a cost-benefit balance. Whether these ROI calculators can really deliver helpful numbers or if there are other ways to come to useful conclusions that might help you to decide on a monitoring solution remains to be seen.
Even the example calculation for the gum machine is flawed: the machine needs to be filled, the machine filler needs to be paid—and probably even needs a vehicle to get to the machine. That is just one of many additional factors that play a role in this simplified example. While things can get rather complicated with just a simple vending machine, the calculation for monitoring software can turn into a highly complex guessing game with many speculative numbers. While some numbers are easy to understand and to calculate, other values—like the expected increase in staff productivity resulting from implementation of the monitoring solution in percent—are usually completely contrived. Most values entered in an online ROI calculator are probably more interesting to the provider's sales team than they are able to deliver a reliable ROI calculation.
Even though it is obvious that ROI calculators for monitoring software can only deliver vague, approximate values, they are often requested and, if offered, the results are considered in the evaluation of the software. Ultimately, as mathematician and philosopher Johannes Kepler has already determined, people are more convinced by quantity than quality. Numbers sell better than long explanations and the administrator must justify his/her purchase to the management, who doesn't usually accept simple explanations like, 'because I need it'.
In order to provide you with some assistance, we've written a white paper on ROI calculations for monitoring software. But beware: we cannot (and don't want to) take the thinking process away from you. All we can offer is an overview of factors that should be considered when evaluating monitoring software, as well as a few examples that might help you to assess some factors a little better.
You there!
