The Strategic Importance of ROI in Higher Education Technology Investments and Best Practices
Part 2 of 2
Modernizing with best-in-class technology is mission critical for higher education institutions navigating an evolving landscape. As the demands on higher education shift at unprecedented speeds, colleges and universities must make informed decisions to right-size their technology platforms – balancing optimized processes, new efficiencies, stakeholder needs, and budget constraints.
To guide these major investments, institutions must align their priorities with a comprehensive understanding of the features, benefits and long-term value of potential solutions. A well-defined return on investment (ROI) or value proposition goes beyond simple cost comparisons to offer a wholistic view of both financial and qualitative benefits. By doing so, it empowers stakeholders to make strategic decisions that enhance student success, streamline operations, and drive measurable results across the institution.
In the first part of this guide, we outlined the benefits and challenges of building a value proposition. These benefits include shaping priorities and driving transformative change, building a compelling case for modernization, and connecting financial feasibility to an institution's broader mission. The challenges of building an ROI analysis include aligning technological investments with institution priorities, given their far-reaching implications; the tension of balancing measurable outcomes with hard-to-quantify benefits like cost savings versus enhanced student experience; directly addressing stakeholder concerns to overcome perceived high costs of technology investments; and separating relevant data from irrelevant data, to produce an accurate ROI analysis.
Best Practices for Building a Strong Value Proposition
CIOs, COOs, and other higher education leaders must generate clear and comprehensive ROIs to show key stakeholders the long-term value of technology investments. When it comes time to develop an ROI, institutions should adhere to a set of proven best practices to ensure success:
- Go Beyond Total Cost of Ownership (TCO) – ROI analysis should extend beyond TCO to encompass every impact of a technology investment, such as long-term benefits of scalability, flexibility, and student success outcomes. While presenting accurate TCO metrics is important for some customers, incorporating these broader impacts strengthens the value framework and facilitates interdepartmental buy-in. As Caroline Mueller, Senior Customer Impact Manager, advised, "If you start with costs, it's very hard to move away from costs and have a meaningful conversation about value. Strategy with value – and aligning the technology investment directly to your institution's goals – sets the stage for better decision-making."
- Take an Iterative Approach with Stakeholders – To maximize alignment and buy-in from key stakeholders and minimize risk, leaders should make an action item of regularly engaging those stakeholders while developing the value proposition. This may take the form of recurring video calls, e-mail check-ins, team communication platforms, or in-person meetings. Taking an iterative approach to interdepartmental communications and circling back with critical parties at each juncture of the ROI process will level-set expectations and facilitate your institution meeting and exceeding stakeholder requirements.
- Use Benchmarks and Peer Insights – Using industry benchmarks, analyst reviews, testimonials and peer insights enhances the credibility and relevance of an ROI analysis. Benchmarks provide a clear comparison of institutional performance, helping identify specific areas where a technology investment can deliver measurable improvements. Case studies and testimonials from similar institutions offer a practical perspective on the qualitative and quantitative benefits of investments, such as improved process efficiency or student success. These insights not only give useful reviews of technology solutions and vendors but also give you the chance to gain valuable knowledge about the investment and implementation processes.
- Include Both ROI and Cost of Inaction (COI) – As you build an ROI in accordance with industry best practices, a Cost of Inaction — or COI — will take shape. The COI presents stakeholders with the quantitative and qualitative cost of not seizing an investment opportunity. Through its financial metrics, it also serves as a tangible piece of evidence that will expedite decision making. As Vanessa Tribastone, VP Customer Impact, Ellucian, emphasized, "COI is a powerful tool for highlighting urgency. It can provide a clear framework to demonstrate the need for change."
- Ensure Transparency in Methodology and Highlight Key Value Drivers – A well-executed ROI must prioritize transparency in both methodology and data. Clearly outlining data sources, assumptions, and calculations builds trust and enhances credibility. Additionally, emphasizing the key value drivers of a technology investment – whether related to cost savings, revenue growth, student success or operational efficiencies – ensures that stakeholders understand the broader short- and long-term benefits. Transparency and clarity not only bolster confidence in the analysis but also strengthen its ability to drive consensus and support for strategic decisions.
Conclusion: Ensuring Investment Buy-In by Utilizing ROI Best Practices
Leaders building a business case for a major technology investment must understand its challenges — which were detailed in Part One of this guide. Combining that knowledge and utilizing established best practices in your ROI creates a value proposition that delivers maximum impact at minimum risk. Constructing and delivering a comprehensive, accurate, holistic ROI will help your institution make better-informed decisions about technology investments.
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