Return on investment initial considerations for measuring cost savings of at reuse
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Return on Investment: Initial Considerations for Measuring Cost-Savings of AT Reuse. Sara Sack Director of Assistive Technology for Kansans May 25, 2007. What is ROI Analysis?. One of several approaches to building a financial business case (Solution Matrix)

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Return on Investment: Initial Considerations for Measuring Cost-Savings of AT Reuse

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Return on investment initial considerations for measuring cost savings of at reuse

Return on Investment: Initial Considerations for Measuring Cost-Savings of AT Reuse

Sara Sack

Director of Assistive Technology for Kansans

May 25, 2007


What is roi analysis

What is ROI Analysis?

  • One of several approaches to building a financial business case (Solution Matrix)

  • A performance measure used to evaluate the efficiency of an investment or…

  • A performance measure to compare the efficiency of different investments.


What is roi analysis cont

What is ROI Analysis? (cont.)

  • ROI is a traditional financial measure to determine benefit to the business

    • Benefit of training

    • Benefit of asset purchase decisions (computer systems or a fleet of vehicles)

    • Marketing, recruiting programs

      Example: Florida’s DOE is evaluating measures of performance in light of resources allocated to individual schools and districts


What is roi analysis cont1

What is ROI Analysis? (cont.)

  • ROI is a metric that yields some insights into how to improve business results in the future (L. Dombrowski)


Simple roi vs roi

Simple ROI vs. ROI

  • The benefit (return) of an investment is divided by the cost of the investments; the result is expressed as a percentage or a ratio. This is referred to as “simple ROI”.

    ROI= Gains from investment – Cost of investment

    Cost of Investment

    $700,000 - $500,000 = 40%

    $500,000


Simple roi investment example

Simple ROI Investment Example

  • ROI is used to compare returns on investment where the money gained or lost—or the money invested—are not easily compared using monetary values. For example, a $1,000 investment that earns $50 in interest obviously generates more cash than a $100 investment that earns $20 interest, but the $100 investment earns a higher return. So….


Simple roi investment example1

Simple ROI Investment Example

$50/$1,000

$1050 - $1000 = 50 = 5% ROI

$1000 $1000

$20/$100

$120-100 = 20 = 20% ROI

$100 $100


Roi or complex roi

ROI (or Complex ROI)

  • In complex business settings, it is not always easy to match specific returns with specific costs (Solution Matrix)

  • New formulas involve calculating:

    Total Benefit – Total Costs = ---- x 100 =ROI

    Total Costs


Considerations for using roi

Considerations for Using ROI

  • Locate software programs designed to help managers identify total benefits and total costs

  • Establish measures and state them publicly before calculating ROI

  • Determine time periods and state them carefully.

  • Determine appropriate calculations to be made.

  • Be aware that shorter or longer time periods may produce quite different ROIs.


Next steps for atk related to roi

Next Steps for ATK Related to ROI

  • Review electronic management software including RADDIE, Solution Matrix, and others

  • Determine Internal and External benefits and costs

    • Staff/labor costs

    • Storage

    • Transportation/delivery costs

    • Repair costs

    • Supplies

    • Marketing and outreach

    • Training

    • Volunteer time and associated costs

    • Overhead

  • State ROI measures before starting

  • Compare trial software programs


Return on investment initial considerations for measuring cost savings of at reuse

Questions?

For more information contact: Sara Sack, University of Kansas, 620-421-8367 or [email protected]


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