Guest post by Sue Nally
Simply put, executives have a responsibility to investigate the monetary impact of a continuous improvement project (CIP) on an organization. That means examining benefit-cost ratio, ROI%, payback period, and numerous other factors fully and accurately to reach a conclusion; implementer confidence alone won’t justify resource investment.
Return on investment calculations are challenging; accurately isolating the effects of a program, converting the benefits to a monetary value, identifying the intangible benefits, and calculating fully-loaded costs will make even the most fastidious accountant break into cold sweats. Fortunately, information technology and real-time reporting capabilities have revolutionized the development of ROI Project Management strategy.
Today’s global enterprise continues to expand in complexity. The speed at which information travels will continue to accelerate, requiring systems that are nimble and flexible. Small to mid-size organizations, who don’t have dedicated teams for this kind of tracking, have little hope of responding effectively without applying a technology-based solution for tracking and assessing ROI.
Some companies undergoing continuous improvement processes have developed applications to track this kind of fiscally-focused data, given all of the inputs unique to their business or industry. A business’ need for sustainability, scalability, history, and standard project value costing have proven that, for some companies, it’s worth the cost.
In one recent case study, their “cost saving tracker” has only begun to impact their continuous improvement culture. They have found that the Tracker’s history files have become a virtual think-tank of ideas; because anyone in the company can browse the entries, it is common for team members to research the history files for benchmarking information. Intrinsically, entry visibility creates accountability and competition and encourages idea sharing. The Tracker itself been an efficiency improvement tool for team members, eliminating subjective paper entries—but it’s also a systematic way of saying show me the money!