The Cadre Report


What is the ROI of your Vision?

November 13, 2018 by Jack Picciuto, PhD, PMP, Director of Operations Analysis and Planning

ROI and Vision are not often written in the same sentence. Achieving the desired ROI for any investment is always a primary goal. Similarly achieving your Vision should also be a goal. But is it possible to determine the ROI of your Vision? The answer lies in your organization's ability to understand where they are, agree on the vision for the future, establish a roadmap to get there, model/forecast the cost of the vision and ultimately deliver.

After an organization has a shared understanding of its Current State, a shared agreement of its Future State and a clear, committed Strategic plan, undoubtedly the next question is going to be, "what will this cost us?" Whether a government, private or commercial organization, the capital and resource investment needed to achieve the Future State is a critical input for the decision to move forward. IT Cadre Cost Range Support is a systematic approach to determine a range of costs for an organization based on the concepts of mathematical modeling and cost estimation. In a typical independent cost estimate, experience cost estimators can take many months to determine a comprehensive cost estimate which will be used to assist with contract award, budget requests, and program management throughout the life of program. IT Cadre Cost Range Support is an agile cost model that can quickly give the decision maker sufficient cost information to make informed decisions.

cost curve

  1. Define the Problem. Using the knowledge gained from the construction of the Current State, Future State and Strategic Road Map visualization, IT Cadre starts with constructing a comprehensive list of items that can incur a cost (direct or indirect) to achieve the Future State.
  2. Develop a list of assumptions and all items to be priced. Key to any model is a list of valid assumptions. Like the visualizations, there must be a shared understanding of these key assumptions. What is included in the cost range, and just as important, what is not included?
  3. Tailor and Run the Model. IT Cadre's Cost Range Support model incorporates a Monte Carlo Simulation to simulate the cost for each component based on a probability distribution that is created for each component. These costs are captured and grouped into two fundamental categories – one time implementation costs, and annual/recurring costs. For example one-time costs include research hours, testing, configuration, procurement, data conversion, and implementation. Whereas recurring costs include costs such as annual licensing, routine maintenance, enhancements, and security patches.
  4. What if Analysis and Managing Delivery. The organization should test and challenge all parts of achieving its vision. This robust model is able to incorporate changes, can be used to manage probable delivery costs, and is great for what-if analysis. For Example: What if instead of purchasing hardware we purchase a service that is hosted off-site? What if the research of new solutions takes twice as long as we assumed? What if we only get ½ of our budget to modernize in year one? What if our data migration and mapping turns into a full blown data conversion effort? What if we significantly underestimated the costs to add additional power and cooling to handle the additional computing capacity? What if we leave the legacy system running for 3 years instead of one? What if I increase/reduce the scope of the program? The model can be quickly modified to handle these scenarios and produce a different set of cost ranges to assist with decision making.

Achieving a Vision that requires transformational change is one of the most challenging endeavors in business or government. These major achievements require strong leadership and a complete understanding of today, the future and what it takes to get there. The financial perspective complements IT Cadre's Visualization Engineering® capability by providing the ROI of a vision and what-if decision support for leaders that can be used before an investment is made as well as during program delivery.