How to Measure Your IT supplier's ROI Effectively

When you partner with an IT supplier, you expect them to help you improve your business. They should provide IT solutions that boost your productivity, increase your revenue, and reduce your costs.

But how can you measure their return on investment (ROI) effectively?

Here are some tips to help you get the most out of your IT supplier.

Editors Note: This blog post was last updated in Aug 2024.

How to Measure Your IT Supplier's ROI?

Here are 5 ways through which you can measure your IT vendor's ROI effectively:

1. Set Clear Expectations

2. Define Your Metrics

Metrics provide an essential framework for measuring ROI. Every organisation will require a different set of metrics depending on the needs of the business and the desired outcomes. When you’re creating metrics it’s worth bearing in mind:

The need to align the metrics with your business goals – the service delivered by your IT supplier should be supporting the broader objectives of the business, whether that’s greater efficiency or broader customer reach.

Restrictions when it comes to collecting information – assessing the performance of an IT supplier is essential but it does also add another task to the list. So, when you’re defining metrics, choose those where collecting information with which to make your assessments will be simple – perhaps using existing systems and processes.

How to manage outcomes – if you find that a supplier is falling well below the standards you set with the metrics you chose, what action will you take? It’s important to ‘finish the sentence’ so that whoever is managing the process can use the metrics you set to improve ROI, rather than gathering data for data’s sake.

3. Track the Right Metrics

To measure ROI, you need to track performance metrics that are relevant to your business goals.

For example, if you want to improve your customer service, you could measure the average response time, the resolution rate, and the customer satisfaction score.

If you want to reduce your downtime and improve your IT infrastructure, you could track the mean time to repair (MTTR), the uptime ratio, and the system availability.

4. Use Data Analytics

Data analytics can help you make sense of your metrics and identify trends and patterns. You can use tools like Google Analytics, Tableau, or Power BI to visualise your data and create custom reports.

For example, you could create a dashboard that shows the sales performance, the labour costs, and the ROI for each month.

By analysing the data, you can spot opportunities for improvement and make informed decisions about your IT investments.

5. Review and Adjust

Measuring ROI is an ongoing process, not a one-time event. Make sure you review your metrics regularly and adjust your strategy accordingly.

For example, if you see that your sales are plateauing, you may need to tweak your marketing campaign or your pricing strategy.

If you notice that your customer complaints are increasing, you may need to invest in more training or revise your service level agreements (SLAs).

Some Common Metrics

Each organisation is different but there are some common metrics that will go right to the heart of IT supplier ROI for almost every business. 

• Operational performance – how does the supplier fare concerning productivity, management, customer service and performance in specific activities?
• IT spend ratio – how much does IT supplier spend cost the business, as compared to other key expenses? You might also want to compare the size of spend against those in years gone by, as well as breaking this down into IT maintenance spend against IT innovation spend.
• Helpdesk – if you’re getting IT support from a third party supplier then how effective has this been, both in terms of speed of solving problems and the satisfaction of those assisted.
• Critical business support – looking at the value that has been delivered to sustaining and protecting critical business applications, particularly in times of crisis.

Whether your IT supplier is delivering ROI will depend very much on whether they’re achieving the goals you’ve set and adding value to your organisation. Focusing on performance, cost and support delivered will provide you with a solid foundation for determining whether or not that is happening.

Conclusion

Measuring your IT supplier's ROI is crucial to ensure that you're getting value for your money and meeting your business goals.

By setting clear expectations, tracking the right metrics, using data analytics, and reviewing your strategy regularly, you can make informed decisions and improve your ROI over time.

Remember that ROI is not just about money, but also about customer satisfaction, employee productivity, and overall efficiency. Keep an open mind and be willing to experiment and innovate to stay ahead of the competition.