Calculating ROI, or return on investment, is a straightforward equation that involves dividing net profit by cost. However, despite its apparent simplicity, truly understanding the net profit and cost of investments in technology can be a complex task. To ensure that organizations are getting the most out of their consulting expenses, they must take a holistic approach. One of the main objections that business managers have when considering hiring an outside consultant is the difficulty of evaluating and quantifying the value of what the consultant will do for the company.
To address this issue, organizations can use ROI consulting contracts to assess whether they are meeting their objectives, earning their consulting fees and providing the best return on investment for their organization. ValueIT, a Windows-based tool suite developed by consulting firm Alinean LLC in Orlando, is, in effect, three IT budgeting tools in one. The tools are designed to assess the relationship between IT spending and a company's overall financial performance, but they also include a list of some 150 intangible benefits that IT managers can include in their ROI calculations, such as customer retention rates. To ensure maximum return on investment, organizations must focus on managing demand so that their team's goals and objectives are aligned with the ambitions of the organization.
This includes establishing efficient governance and evaluating performance, as well as anticipating the consequences of the project. Additionally, it is important to align consultants with stakeholders before starting the project. To calculate ROI, divide net benefits by total training costs and multiply the total by 100 to get the ROI as a percentage. As projects progress over time, it can be a practical and concrete tool to help justify ongoing consulting expenses to a board of directors or shareholders.
At Consulting Quest, we help companies make a greater impact by better using, purchasing and managing consulting services. Smart Consulting Podcast is also on a mission to turn consulting clients into smarter and more informed purchasers of consulting services. If you're ready to see for yourself how an expert business consultant can help your company grow and thrive, contact the Cornerstone Consulting Organization.