ROI Measurement
The process of calculating return on investment by comparing the gains from an investment against its costs.
In-Depth Explanation
ROI (Return on Investment) measurement quantifies the financial return generated by an investment relative to its cost. For AI and automation projects, ROI measurement is crucial for justifying investments and prioritising initiatives.
ROI calculation: ROI = (Gain from Investment - Cost of Investment) / Cost of Investment × 100%
AI/Automation ROI components: Benefits (Gains):
- Time savings (hours saved × labour cost)
- Error reduction (cost of errors avoided)
- Revenue increase (from improved capability)
- Customer satisfaction improvements
- Compliance/risk reduction
Costs:
- Software/platform fees
- Implementation services
- Internal time investment
- Training costs
- Ongoing maintenance
ROI measurement challenges:
- Quantifying soft benefits
- Isolating AI impact from other factors
- Long time horizons
- Hidden or indirect benefits
- Changing baselines
Business Context
Demonstrating ROI is essential for securing AI investment approval, maintaining stakeholder support, and prioritising future projects.
How Clever Ops Uses This
We help Australian businesses build ROI measurement frameworks for AI initiatives, establishing baselines and tracking value realisation over time.
Example Use Case
"Calculating that an AI-powered customer service chatbot handles 5,000 queries/month at $0.50 each vs $8/query for human agents - demonstrating clear ROI."