FINANCIAL BENEFITS AND INVESTMENT APPRAISAL

Financial benefits are the key contributor to the ROI. The ROI for a business change calculates the net benefits by subtracting the costs incurred from the gross benefits. This is the effective ROI. Financial benefits will arise from either an increase in the income of an organisation or a decrease in the costs. Few investments in business change can be solely linked to an increase in income. One example that is more attributable than others is where existing products are later sold on the internet with no increase in advertising. Revenue from this new channel can be more directly linked to the business change.

A decrease in costs may occur through reduced operating expenses such as material or labour ...

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