ABSTRACT
Now that monetary benefits are known along with the costs, the next critical step is to calculate the actual return on investment. Although this is an easy step—following two specific formulas—the return on investment (ROI) itself deserves much care and attention. Taken alone, the ROI calculation has very little value. When considered in conjunction with the other measures, it provides additional insight. This chapter explores the calculation, use, and abuse of ROI. It underscores how it should be interpreted and utilized to become an important part of the evaluation mix. When benefits are compared to costs, it is important to include all the costs. The conservative approach to calculating the ROI has a direct connection to cost. Profits can be generated through increased sales or cost savings. In practice, there are more opportunities for cost savings than profit.
