Why IT ROI Calculations Become Meaningless After A Buyout

No IT project is likely to receive funding these days without a detailed calculation of return-on-investment (ROI). Yet those figures are often highly speculative and subject to rapid change, especially in the event of one company acquiring another.

Wine picture from Shutterstock

I was reminded of this via a customer presentation at a media luncheon hosted by call centre software provider Interactive Intelligence earlier this week. Cameron Brawn, head of IT at Liquor Multi Option Retail, explained how the organisation had begun an upgrade of its call centre technology four years ago.

You’ve almost certainly never heard of Liquor Multi Option Retail, but it runs Cellarmaster Wines, Winemarket, Nexday, Langton’s & the New Zealand Wine Society. Supermarket giant Woolworths acquired the group in 2011.

When planning the upgrade, the group came up with a “strong business case for total replacement”, Brawn said. However, once Woolworths acquired the company and the call centres were deployed to handle other elements of the business, those calculations essentially became meaningless.

“The business grew very rapidly once we were purchased, so it’s hard to do ROI. All we’ve done over the last three years is add additional sites and licences,” Brawn said. Headcount at its call centres has more than doubled, from 200 to 450.

That doesn’t mean the original calculation was pointless, but it does emphasise that it was a prediction, not a hard-coded reality that had to be met in all circumstances.

A similar logic controlled the group’s decision to opt for an on-premises solution rather than cloud. “We didn’t look at it four years ago — cloud was far more leading-edge then,” Brawn said. “If we were making the decision tomorrow, I suspect we would be cloud based.”

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