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Data Strategy by Majid Abai, Larissa T. Moss, Sid Adelman

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Appendix A. ROI Calculation Process, Cost Template, and Intangible Benefits Template

Some of the ideas in this appendix were derived from the Teradata white paper titled “Measuring Data Warehouse Return on Investment,” by Sid Adelman.

The three most common methods of calculating Return on Investment (ROI) are net present value (NPV), rate of return (yield), and payback period (break-even analysis). The example presented in this section shows all three methods. They are not mutually exclusive—all three are used for evaluation. Although each is valid, the usefulness of any one method alone is limited. For example, payback does not include a measure of value after the investment has broken even. Assumptions are embedded in each model. Net present ...

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