metaidea

Say no to ROI

Michael Mitchell made a presentation on Travel Industry trends recently. Key take-away from the session personally was on the fitment between cultures and systems and on RoI. Having been part of many M&As, made hard choices on systems, benchmarking systems, deciding where to invest for the travel industry, Michael is uniquely qualified and his perspectives are unique as well.

He started from his experience with a couple of mergers and how the choice of systems actually is not of systems itself but of culture. In any M&A does not necessarily mean the best systems will prevail but systems that support the culture that is conducive for business will be picked and sustained. Making the wrong choice means erosion of brand value (in industries like travel the brand development takes as much as 20 years) and service to customers which are actually closer to culture than IT systems. On a follow up question from Jas on how will a conglomerate like SITA develop and deploy across cultures, Michael reinforced the point that it was still a matter of choice on culture that is dominant. So as always systems fit culture and not the other way around.

There was this trend that IT leadership in the industry showing positive outlook on investing in initiatives that had "shorter RoI cycles", commenting on it he said it was not the right thing to do. My question to him was when does RoI cease to be a measure of impact, and what are the alternatives. His response was if an investment was being made to reduce costs (typically cost of transactions around a core service delivered) it is relevant, but the equation becomes murky when revenue is involved. Take advertising for example, it is hard to quantify revenue that came specifically from a marketing initiative and applying RoI is erroneous here. Incremental revenue analysis was suggested as an alternative, but in my opinion that will still have the issue of attribution of credit.

Advertisements
Standard

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s