ROI is dead

Over the last years, selling software based on ROI has been all the rage. That was probably fallout from the dot com bubble where technology companies went over board. Corporate buyers became more demanding asking for tangible demonstration of value created and references. On the other side of the table, software vendors became increasingly sophisticated in the financial exercise. Some of them developed real mastery of the NPV, IRR and accompanying spreadsheets. And yes, we did push and help our customers go into that direction.

I think this period is over.

Some of the most interesting companies I have looked at recently are not selling ROI per se. They are selling strategic advantage, they are selling differentiation; all that with terrific success in the marketplace. On the other hand, I have been involved with companies focusing on pure ROI sells with limited success. Have customers stopped asking for ROI? Of course not! Buyers will continue to require details on that topic and investment process in corporation will still need one. However, I think it is taking a back seat to other considerations, more strategic in nature. Software vendors will still have to jump through the loop but that cannot be the core of the value proposition. There are probably some good reasons to this evolution : market conditions are much better, specially in high-tech, technology are more mature and have demonstrated value and potential (sometimes in the consumer space) and buyers have become more savvy about buying technology. I am not sure how long this will last, but it is definitely worth taking into account when building a go to market approach.

Frederic Halley

Comments

[Thierry]

Glad to read that Frederic - I fully share your point. Speaking at a telecom conference on roaming quality of service today, an executive of a large UK mobile operator mentioned explicitly that in his [roaming] business, being able to identify realistic benefits in terms of customer satisfaction improvement, a key theme in the corporate strategy, was more relevant to get top management approval for launching projects than showing pure financial business cases that are often simplistic.