Web Services Return on Investment:
Working out what you're getting out of Web Services
In this article, the authors have tried to keep a realistic, pragmatic, and balanced approach in determining the return on investment on Web Services. It is worth mentioning that, no matter how promising a new technology is, promoting and encouraging its usage through such articles and papers is not justified until there is a solid business case for its adoption (Samtani and Sadhwani 1). It is fundamentally important for the authors to warn about the pitfalls as and where they foresee them, leaving the final decision up to the us readers who range from senior management (technical and business), through business analysts, and systems architects, to project managers, to business students, and software developers (Samtani and Sadhwani 1)
. I will concentrate mostly on the Return on Investment (ROI) section of their article.
Defining Return on Investment (ROI) (Samtani and Sadhwani 6)
Return on investment (ROI) is a key financial metric of the value of business investments and expenditures.
It is a ratio of net benefits over costs expressed as a percentage. This formula can be expressed as:
ROI = [(Monetary Benefits (Tangible and Intangible) - Cost of using Web Services Technology) / Cost of using Web Services Technology] x 100
There are two fundamental methodologies through which companies can conduct ROI analysis of a new technology such as Web Services. They are discounted cash flow analysis and payback period analysis. Below are some of the fundamental concepts behind them (Samtani and Sadhwani 7).
Direct and Indirect Measures
Both the direct, cash flow-generating contributions of a new technology or project, as well as the indirect measures valued by management should be considered when calculating the ROI.
Discount Rate or Weighted Average...