ROI for technical solutions: What is a reasonable timeframe?

When companies invest in technological solutions, one of the most common questions is: How long will it take before the investment pays off? Return on Investment (ROI) is a critical metric for understanding the value of a technological investment, but many companies have unrealistic expectations. This article explores how to approach ROI and why a 12–36 month timeframe is often reasonable.

Realistic expectations for ROI

It’s easy to believe that technological solutions will quickly generate significant savings or revenue. In reality, it often takes longer for results to become evident.

To ensure success, it’s crucial to define from the outset what the solution is meant to achieve. Setting concrete metrics will provide a clear picture of how well the investment performs over time.

Examples of metrics:

• Time savings: How many hours can the solution save within a given period?
• Cost savings: What direct expenses can be eliminated?
• Revenue growth: What new opportunities for income are created?

What is a reasonable ROI period?

A reasonable ROI period for technological solutions is often between 12 and 36 months. Keep in mind that the initial cost of a technological investment can be high, which affects how long it takes to break even.

During this period, the solution is integrated into the organization. It takes time to optimize its use and begin realizing the savings or revenue increases needed to offset the initial expenditure.

How to calculate ROI

Calculating ROI for technological solutions can be challenging, as many values are abstract. However, starting with concrete figures is key.

For example:

If a solution can save 4,000 hours per year, and each hour is valued at 500 SEK, this results in annual savings of 2 million SEK.

If the solution costs 3 million SEK to develop, the ROI is achieved in 18 months.

It’s also important to include other values, such as the potential to scale the business or improve customer experience, even though these may be harder to quantify. These factors can further enhance ROI.

Challenges with expectations

A common mistake is assuming that technological investments will quickly yield substantial profits. Many are overly optimistic at the outset, leading to disappointment when the project’s true costs and timelines become apparent.

To avoid this, companies should think backwards:

• What is the goal of the investment?
• What value should the solution create for the business?
• How can that value be measured and tracked?

By setting clear expectations and a solid strategy, companies can avoid frustration and plan their investments more effectively.

Long-term value beyond the ROI period

When a technological solution reaches its ROI period, the work isn’t over. To maximize value and extend the solution’s lifespan, it’s crucial to consider maintenance and reinvestments. Regular updates and improvements can protect the solution from security risks and ensure it continues to deliver value to the organization.