ROI (Return on Investment) at country level or ROI at Global level or ROI at regional level………..which is the right parameter to look at executing business excellence driven transformation projects in HR and Finance process in a multinational?
I don't know if there is 1 perfect way of looking at this, but want to give it a shot. If the cost incurred is at a Global level, then I would do my ROI at a global level. But then comes the complexity of doing an ROI for a small entity of an MNC, and that ROI results may look like a horror story. So the best thing to probably do is to average out the cost to the highest level possible and try to cushion the impact to the smaller entities of your business.
Agree…no perfect way of looking at ROI. But I believe there are few factors or question we can ask ourselves: 1. Why ROI calculation has to be 5 year threshold for a transformational project. What is the hurry for organization to get profit from it so fast? Isn’t a HR/Finance transformation a more of infrastructure for the company than a new product development? 2. What level of localization we are going with in this transformation? If it is much localized to a country or business than isn’t that the right place to tick the ROI? 3. Are we first arriving at cost of the project and than trying to arriving at the ROI or are we fixing the time within which we need get our ROI with given current operation and future cost details on hand. 4. Is there a mismatch in kind of technology and project approach with the kind of transformation and business? For example: If we pick up to implement an ERP system made for large organization. Assumption is the ERP system will fit the large organization requirement of multi country and multi site with more than 20000 employees. But execution approach become very very localized due to local business/organization need………….than……..we no longer implementing ERP for “Large organization” but implementing for “small origination” within the large organization. Now ROI will go south way. Now there is no match b/w ERP system and the kind of organization we are implementing it for. If we pick up a ERP which is meant for small origination than ROI will come back on track once again.
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I don't know if there is 1 perfect way of looking at this, but want to give it a shot. If the cost incurred is at a Global level, then I would do my ROI at a global level. But then comes the complexity of doing an ROI for a small entity of an MNC, and that ROI results may look like a horror story. So the best thing to probably do is to average out the cost to the highest level possible and try to cushion the impact to the smaller entities of your business.
ReplyDeleteAgree…no perfect way of looking at ROI. But I believe there are few factors or question we can ask ourselves:
ReplyDelete1. Why ROI calculation has to be 5 year threshold for a transformational project. What is the hurry for organization to get profit from it so fast? Isn’t a HR/Finance transformation a more of infrastructure for the company than a new product development?
2. What level of localization we are going with in this transformation? If it is much localized to a country or business than isn’t that the right place to tick the ROI?
3. Are we first arriving at cost of the project and than trying to arriving at the ROI or are we fixing the time within which we need get our ROI with given current operation and future cost details on hand.
4. Is there a mismatch in kind of technology and project approach with the kind of transformation and business? For example: If we pick up to implement an ERP system made for large organization. Assumption is the ERP system will fit the large organization requirement of multi country and multi site with more than 20000 employees. But execution approach become very very localized due to local business/organization need………….than……..we no longer implementing ERP for “Large organization” but implementing for “small origination” within the large organization. Now ROI will go south way. Now there is no match b/w ERP system and the kind of organization we are implementing it for. If we pick up a ERP which is meant for small origination than ROI will come back on track once again.