Delivering ROI for your charity's IT budget
Charity IT buyers are under considerable pressures; they often
lack the budgets of private organisations, yet still must ensure
the organisation's software enables efficient business
For an IT purchasing decision to be most effective, it requires
blended business and technology considerations. Return on
Investment (ROI) is used to define the business value of an IT
investment, and can enable third sector organisations to
demonstrate business value and financial impact.
The provision of an accurate representation of the value of an
IT investment, and demonstration of the level of ROI the charity
can expect, how soon and how certain the return is, will in turn
help secure buy-in for the purchase from the senior management
Project failures are all too common when delivering an IT
project; the risk is particularly within the charity sector
charities where decisions involving the investment of large sums of
money can often be complex, touching many departments and donors
and beneficiaries as well as employees. Decisions made therefore
require very careful consideration, a significant amount of time
and research. We contend that all charities need to use ROI
as a key tool in the project armoury, like businesses do.
So what are the key considerations for third sector
organisations looking to ensure an ROI for their IT budget?
Writing a business case
To deliver full ROI for your IT budget, it's important to
consider the business case and long term function within the
organisation. Without this strategic view, charities will fail to
reap the rewards of building efficiencies into day-to-day
A project is driven by its business case, which provides the
most important set of information for the project and drives
decision-making to ensure it is aligned to the overall
not-for-profit objectives. The business case defines the benefits
expected, as well as an understanding of the costs and risks of the
project, and outlines the return you are likely to get for your
A common oversight of many charities is to focus too
heavily on cost. Greater emphasis should be put on ROI, as this
will provide a better idea of whether the project represents value
for money. In the long-term any business case should also be put
into the context of the overall strategy and goals of the charity.
Without this clarification of the organisational benefits a project
is unlikely to gain approval from decision makers.
To deliver real ROI for the IT budget, an appraisal of the
proposed investment should be conducted in advance. This will
balance the development, operational, maintenance and support costs
against the projected return that will be gained from the project
Providing metrics by which the project can be judged to be
successful is also important. This will illustrate the level of
accountability that decision makers will be looking for. By setting
a baseline - the 'do nothing' option, will give an understanding of
the costs and benefits if the project is not undertaken. This can
then be compared against the expected outcome if the project is
Software Requirements Specification
Putting together a Software Requirements Specification (SRS) is
key to understanding the software requirement needed. It should
detail the function and capability required from the new
development or system and is essentially a blueprint of what will
be needed in the future.
The SRS document should consider what the software is supposed
to do, how it should perform, its interaction with people within
the organisation, the system's hardware and other software.
Alongside this the SRS should prioritise requirements and ensure
they are quantifiable and measurable. Subjective and intangible
requests need to be carefully considered to ensure that the
solution meets the objectives of the project, and is considered a
success after launch.
Managing project risk
Risk is a major factor to be considered during any project,
particularly within the third sector, where budget is tight and
success is therefore of even greater importance. To deliver
effective ROI for the IT budget it is crucial that risks are
identified, controlled and contained.
By implementing a consistent approach to managing risk,
and putting into place a process to monitor them, the right balance
of control can be maintained to deal with risks, and reduce a
charity's exposure to them.
Top tips to ensure a ROI on IT budget
1. Planning is critical so charities should think carefully and
plan every element, including how it will be used and who will use
2. Consider how IT software will improve employee or volunteer
productivity, and if it will make processes more efficient and
improve fund allocation to beneficiaries. This will enable a
charity to clearly understand and demonstrate the IT project
3. With all IT projects, as many risks are non-technical as are
technical. Because of this the introduction of IT software to
employees needs careful consideration. For example, considering
training one team at a time up to speed with its capabilities. To
maximise ROI a strategy must be in place to encourage or force
adoption of the new solution.
4. To maximise IT ROI a strategy must be in place at the outset
to determine if the IT solution is a cost effective option for the
charity and how it will impact on the bottom line long-term.
5. Consider the timeline for ROI. Correct planning and
preparation is crucial to understanding at what stage the
organisation can expect to see a return on its IT investment. This
sets realistic expectations, allows changes to be made if
expectations are not being delivered, and acts as a helpful
reminder to actually evaluate ROI after the event, something which
is all too often forgotten.
This article was published in Civil Society on 6