Return on investment, or ROI, is easily the most important metric that companies look at when it comes to decision making. ROI oftentimes allows businesses to make strategic decisions based on the data and determine the impact those decisions have. According to Forbes Advisor, “ROI is a metric used to understand the profitability of an investment. ROI compares how much you paid for an investment to how much you earned to evaluate its efficiency.” While that definition is accurate, Brian DeVault likes to define ‘investment’ more broadly.
And so as we think about, let’s say, the potential benefits of outsourcing versus insourcing. In terms of if I’m an enterprise and I’m thinking about heading down this path and let’s say I want to build an ROI proposition for myself and figure out how does this make sense, what are the key benefits that you’ve got to factor in?
I think it depends on what seat you’re in, in the organization and what role you’re in. Like for you, you’re a numbers guy and what you build these real complex spreadsheets to figure out, what what the RIO on that would be?. And I believe that you
The reason I ask the reason the question.
And I believe that you do it correctly. But that’s not something that I would ever do. But I also cited cost to be the single biggest factor when considering IT outsourcing versus an MSP engagement.
But here’s what I’ll say is, I think the organizations that choose to do this strategically are doing so so that they can they can focus on their business and not have to worry about the operational or the day to day support that an MSP does really well. So it’s day to day help tickets. My printer won’t print. I’ve got a new user starting on Monday. I need user accounts created. I’ve got this user that left. I want to make sure security is buttoned up for them.
Those types of things that are repetitive tasks like that, in my opinion, are not things that you need to be doing internally. Those are things you need to be outsourcing. You need to free up your staff that is capable of having strategic discussions about how you move the business forward, things like digital transformation, what are we doing within our organization to accomplish digital transformation? What are we doing internally to empower our sales team using technology?
Those are things that should remain in-house and I think you get a lot of benefit from if you offload the responsibility of the day to day servicing of tickets and so forth to an MSP or an outsourced entity.
And as I think about ROI, I don’t necessarily think about it just purely from a cost perspective, because to the point that you just made about accelerating a digital transformation program, such as demand generation platform, or I’m going to put in place a new CRM and workflow for the salespeople that are going to drive productivity by 20 percent.
Exactly. And those things need to be factored in.
If you if you if what you put in place creates efficiency and optimization, especially as it relates to people that are either generating revenue saving revenue or other areas that have a financial impact, you can build those in your home because if if you give salespeople 20 percent more time, presumably they’re going to generate 15 percent.
That many more opportunities. Well, and I’ll use a term that you used several years ago when we were talking through Netrio strategy and who we are and what we wanted to be as a service provider. And I remember using a term growth enabler, and that’s what we are. And when you think about applying those types of changes to an organization to say, what, we’re going to help you grow by removing all this operational overhead from your organization that you have internally that you’re suffering from.
Right. You’re basically under a rock here operating in this in this mode. Let’s take that off your plate and then let’s free you up to make these organizational decisions around IT strategy that help you grow.
In this week’s White Board Wednesday video, Mike Cromwell and Brian DeVault discuss ROI proposition and the key benefits that contribute.
Outsourcing Metrics (ROI)
While cost is not the only way to identify ROI, it is a huge component of calculating if an investment is worthwhile for your business. According to Tiempo Development, you’ll typically measure ROI using both qualitative and quantitative metrics, which break down as follows:
- Qualitative—Qualitative ROI describes the benefits of an investment that may be hard to quantify, yet still have an impact on the bottom line.
- Quantitative—Quantitative ROI refers to clear, measurable outcomes like revenue generated, time saved, and so on
If you are looking to calculate a financial ROI, you can use this easy equation: ROI = (Net Profit / Cost of Investment) x 100.
NETRIO Enables Growth
NETRIO and other MSP’s prove their ROI by taking small day-to-day tasks off the table to allow for companies to see the bigger picture. Other ways to show ROI Propositions, might be things that are harder to measure. When deciding if this is a worthwhile and strategic decision, companies can consider reasons like focusing on their business and not having to worry about the operational or the day-to-day support that an MSP does really well. Little tasks like day-to-day help tickets, printer issues, new user setup and offboarding are all things that can take up a huge part of an employee’s bandwidth. These tasks need to be outsourced so you can free up your staff to have strategic discussions about how you move the business forward and digital transformation.
As you can see, creating an ROI Proposition for outsourcing MSP considers many other factors besides just a cost investment. NETRIO is laser-focused on being the best partner who enables the growth of your business. This blog post is part of NETRIO’s weekly Whiteboard Wednesday series. Follow along on Linkedin and YouTube each week as Brian and Mike discuss use cases, new technology, and trends.