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ROI - Server

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by rcrc001

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My boss has tasked me with drafting a proposal for the possibility of purchasing a server.

I'm thinking that an ROI would be critical information to place in the document.

This the first such request that I've ever had.

Any assistance from anyone would be greatly appreciated. Thanks!

res

6 replies

by stress junkie

It seems to me that the ROI justification writes itself. Make a list of the technical reasons for upgrading the current server. These should also translate into saved dollars. Examples:
- The current server is slow. End users have to wait for data posts or queries. This interferes with the end users productivity. The new server will process end users' posts and queries five times faster than the current server. End users will be more productive and happier because they don't have to waste time.

-The current server is so old that it is no longer supported by the manufacturer. Field service calls are frequent and cost a lot of money. A new server will be supported by the manufacturer. Field service calls will be fewer and will be covered in the cost of the mantenance contract. The end result is less money spent on support.

-We just want a new toy and we have extra money in the budget. We have to use all of our budget for this year or we'll get a lower budget appropriation in the next fiscal year.

See? It's easy.

by jamesrl

There are three types of benefits:
Tangible Benefits,
Intangible Benefits, and
Additional Benefits

Tangible beneifts are those that you can attribute a number to - numbers like $ saved or hours of productivity improvement. But for an ROI Calculation, you need to reduce it to $$. For productivity savings, or reduction of maintenance time, determine an appropriate labour rate and x by the hours saved.

Intangible benefits are nice to have, but have no economic benefit. Easier to use is often an intangible.

Additional benefits are those benefits that you wont get just from doing the project - they only become benefits for future projects - adding extra unneeded capacity for example.

Once you have calculated the benefits, you then have to calculate the costs - how much will it cost to implement(capital cost of server and labour cost of the project).

Then you can either calculate an annual rate of return on investment, or my preference - a payback calculation -the payback calc tries to determine how many months before the benefits exceed the costs, typically on most IT projects from 6 months to 2 years. Its a more demonstrative calculation.

James

by rcrc001

Thanks James!

You are on the track I'm attempting to following. I just need to know where to locate the formulas.

Royal

by rcrc001

Thanks for the response. I was looking for something in the way of a formula. I could have sworn back in one of those classes I slept through that there was a formula for ROI.

Any suggestions?

by dpenrod

Is this your first server? If so listing the general benefits of a server on your network would be the basis for your ROI.

- better printer management,
- Centralized file storage providing improved file sharing, and insuring data is backed up.

by rcrc001

We have an existing server. The business opportunity is whether to purchase a new one or go with a managed solution. I'm seeking formulas by which to present quantitative results.

Royal

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