If you still measure IT ROI by license cost, you are looking at the smallest part of the picture.
I see this all the time. A company trims a support contract, delays an upgrade, or picks the cheaper vendor. The spreadsheet looks better for a quarter. The business gets slower for years.
That happens because many leaders start with the tool. I start with one blunt question instead:
How do you actually make money?
Once you answer that, things get clearer fast. You can follow the money. You can see the value chain. You can find where technology is helping, where it is dragging, and where it is quietly putting EBITDA at risk.
This matters now because spending is going up whether leaders like it or not. Deloitte found 96% expected higher technology spending over the next five years. A separate survey found 72% of CFOs lead technology budgeting. Still only 20% are satisfied with ROI. That gap tells you the measurement model is weak.
The same pattern shows up in transformation work. McKinsey found companies capture only 31% of expected revenue lift. They also capture only 25% of expected cost savings. PwC found only 32% saw expected results from operations technology investments.
Too many investment cases still promise a tool that promises to do everything. That language sounds good in a deck. When the rubber hits the road, executives are left with spend, disruption, and weak proof of value.
Start With Financials First
At Narrative Group, we look at how you spend money on IT, how you deploy capital, and how technology touches the work. Then we split the business into two simple views: the primary value chain and the supporting functions that affect the cost to operate.
For the value chain, I want to know where productivity is weak, where execution slows down, and where the technical architecture is in conflict with the way the business creates value.
For the supporting functions, I want to know where labor is climbing, where delays are piling up, and where technology could help the team do more work without adding people at the same pace.
Then we go deeper. We map the data flows. We look at the systems. We ask who is talking to whom, how often, and what business rules are supposed to govern the process. Too many IT teams focus purely on requirements. I tell them to start asking core business questions.
I also want to hear from the people doing the work. Show me the day in the life. Show me where it breaks. Show me where people are improvising because the system does not support the job. Very often, the pattern is obvious once you watch it happen. The technology is letting them down.
This is where finance and technology need to stop working in parallel and start working together. A survey found 49% of CFOs saw better outcomes from closer CIO-CFO collaboration. I am not surprised. Good ROI work sits right at that seam between the P&L and the day-to-day operation.
If you are taking an IT investment to the board, the case should be plain. Which line of the P&L will move? What happens to cycle time? What happens to downtime, service levels, or error rates? Can the business grow without hiring at the same pace?
At Narrative Group, we track those contributions year over year so leaders can see what IT is actually doing for the business. What gets measured gets managed.
Productivity and Labor Leverage
This is usually where the strongest return starts to show up.
The point is leverage. Better technology lets the same team handle more volume, make fewer errors, and spend less time on tedious work. It often lowers the rate of hiring. That is a real P&L shift, and it surprises a lot of executives.
Many companies miss this because they push too hard on short-term savings. They cut software budgets. They take the low-cost provider. They hold on to old tools. The expense does not disappear. It moves into manual labor, complexity, and delay. Then innovation slows down because the business is busy feeding bad process.
I have seen one organization keep using an old tool called Mail Manager to save emails into SharePoint so it could avoid Microsoft license fees. It looked cheap. Later, when a Windows 11 move became necessary, that choice made the upgrade harder. Cheap decisions have a long tail.
I have also seen the upside when you get it right. In one e-commerce workflow, a product setup cycle took five weeks end to end, and one person was tied up for about three of those weeks. With automation, that work dropped to four hours. The change created capacity as well as labor savings. In a fixed-price environment, that kind of productivity moves straight into margin.
We saw a similar effect when we transformed IT capabilities for Canada’s largest provider of equipment for people with physical disabilities. The goal was stability, predictable spend, and a model that could support growth. The result was a more reliable evergreen environment, with IT spend and headcount moving from 3.5% of revenue to 2% of revenue. That is the kind of return a CFO can defend.
Speed and Execution Capacity
Speed has value. Delay has cost.
One of the biggest hurdles to scaling is productivity. When systems are clumsy, people become heroes. They patch things. They rekey data. They work around the mess. They stay late to keep the business moving. It may feel committed in the moment. It does not scale.
At Loblaw, we introduced manufacturing-oriented infrastructure-as-software principles. Provisioning dropped from six weeks to one day. That changes the speed of the business. Teams can respond faster, launch faster, and stop waiting for the basics.
At Shoppers Drug Mart, Project Symphony re-engineered the IT function into a portfolio-based matrix organization. Productivity improved by 40% year over year, measured against total invested capital. Later, at Loblaw, an innovation management function completed more than 60 proofs of value in 18 months. More than 10 moved into implementation at scale. Robotic process engineering across four functional areas drove more than $10 million in annualized savings.
That is why I tell leaders to aim for current: mainstream, not leading edge or bleeding edge. Speed comes from standardization, good governance, and disciplined execution. It rarely comes from buying the newest shiny thing.
Revenue Support and Customer Experience
Some investments pay back through revenue support and customer experience before you ever see cost reduction.
Retail made that lesson very clear for me. Take self-checkout. The business logic is easy to understand. You can support more lanes in less space and improve labor use. But the return only holds if the customer can move through the experience without constant staff intervention.
At Shoppers Drug Mart, we piloted self-checkout in two stores. The user interface was simple, friendly, and easy to use. After a three-month pilot, the business approved rollout to 150 stores, and that later grew to more than 400. The model worked because the user experience was clean and the intervention rate stayed low.
At Loblaw, the self-checkout experience struggled because the interventions were too high. The front end had to be rewritten. That is a very practical lesson. Revenue support depends on the operating behavior of the solution. If the customer experience creates friction, or if the underlying data is weak, the ROI falls apart.
I say this often: innovation is making the operation of a business model elegant. If the operation is clumsy, the numbers will tell you soon enough.
Risk Reduction and EBITDA Protection
Risk belongs in the ROI conversation. It should have been there from the start.
If you are the CFO, ask one simple question. What did last year’s downtime cost us?
In large enterprises, downtime tops $100,000 an hour for 98% of firms. The Uptime Institute says two-thirds of outages cost over $100,000. IBM puts the data breach cost at $4.4 million. Mid-sized firms may have different numbers, but the business logic is identical.
I have seen how foundational stability changes the economics. We worked with one client that had six offices. People could not move from one office to another and reliably connect to the network. Meeting rooms barely worked. Every request to IT seemed to get blocked. We assessed the infrastructure, replaced core switches and network gear, replaced outdated servers, put devices on a lifecycle plan, and improved the meeting room setup. Three years later, the managing director told me we had created a problem for him because everyone wanted every office to look like the new one.
That is what happens when the basics finally work.
In smaller mid-sized firms, we will often act as the IT department first. We stabilize the infrastructure. We protect the company. We make sure the devices, networks, and core services are reliable. That is how credibility gets built. Then you can move up into business process and value chain work.
I learned the same lesson during a large loyalty rollout tied to the Optimum program. The technology worked at a small scale. The problem showed up when we had to think about millions of users hitting the same endpoint in a tight window. Performance testing delayed the launch by three to four months. That was painful. It was still the right call. Better to absorb a controlled delay than create a public failure.
Find the boring foundational functions. Fix them. They protect EBITDA.
Enterprise Value Is Part of the Return
The strongest ROI cases go beyond the annual budget. They improve the quality of the business itself.
In one financial services technology provider serving the broker-dealer community, our advisory work stabilized and improved the technology environment. It also improved the P&L and added more than 25 basis points to gross margin. That is operating performance and value creation.
With Canada’s leading reverse mortgage lender, we helped improve project execution so work landed on time, on scope, within budget, and with strong quality. One project alone added materially to enterprise value and contributed to valuation at a five-times multiple in a transaction with a major private equity fund.
We helped a North American insurance distribution start-up create an enterprise-wide IT structure, clarify how funding would be invested across IT ahead of a Series B or C raise, and establish governance for smarter investment decisions. The company went on to raise $100 million USD and had an IT organization ready to scale.
The market rewards operational maturity McKinsey reports that digital leaders outperform laggards on shareholder returns, revenue growth, and expense control. Buyers and investors trust businesses that can scale, govern, and execute.
What Quietly Destroys ROI
A few things show up again and again:
- underdefined business rules
- vendor sprawl
- cheap custom software built by temporary contractors
- old systems kept alive for the wrong reasons
- a culture where IT is always firefighting and never allowed into the strategic conversation.
AI hype belongs on the list too. I am optimistic about AI in long-running workflows, data quality, and decision support. We are doing work in those areas now, including the use of AI and LLMs to help with master data across legacy environments. But AI is still a very good liar. It needs supervision, sound business rules, and strong governance. Without those things, it is not ready for prime time.
You cannot just codify broken business processes. I push clients to document the process, define the business rules, and clean up governance before they automate. Start small. Pilot. Learn. Then expand. The companies that skip those steps usually end up automating waste.
I also tell leaders to be ruthless about where they are truly different. Every process should be treated as one of three things: competitive advantage, point of parity, or commodity. If it is a commodity, use vanilla software. For the things that do not represent competitive advantage, treat them like commodities and outsource where it makes sense. In most businesses, what makes the offer unique is the people, not the technology.
Phasing matters too. Very rarely do I recommend a big-bang move. Good transformation is incremental. You assess it, take the quick wins, and keep moving.
In my view, IT is effectively two departments. One part runs the foundational services. The other part should deeply understand the business and drive productivity. If your best people are buried in commodity support work, you are wasting strategic capacity.
The Questions I Keep Asking
When a company wants me to support an IT investment, I keep asking the same blunt questions.
Where does this touch the value chain?
What problem in the day-to-day operation are we fixing?
What happens to cycle time, error rates, downtime, or intervention rates?
Can the business grow without hiring at the same pace?
Are we supporting revenue, reducing risk, or improving margin?
Is this a place for vanilla software, or is it truly differentiating?
What is the pilot?
What is the phased plan?
How are we going to show the contribution year over year?
If those answers are fuzzy, the business case is weak.
When the answers are clear, prioritization gets easier. Boards gain confidence. Vendors get managed properly. The company stops talking in ambiguity and starts making decisions.
Final thought
I founded Narrative Group because I was tired of hearing people talk about “the business” and “IT” as though they were separate. My paycheck always had the same company name as everyone else’s. The goal was always the same too: help the company make more money, with less friction and less risk.
I wanted top-tier enterprise advice to be accessible to mid-sized businesses, not just giant corporations with massive internal teams. That is still the mission.
The real ROI of IT shows up when the business runs better, moves faster, supports revenue, reduces risk, and scales without breaking itself.
Follow the money. Ask how you actually make money. Show me the day in the life. Then invest where technology can amplify people, improve execution, and build enterprise value.
Talk is cheap. Actions speak volumes.
Frequently Asked Questions
Why do most digital transformation initiatives fail to deliver expected financial returns?
Because leaders often prioritize tools before fixing process, rules, and operating discipline. True ROI comes from aligning technology to how the business actually creates value. On average, companies capture only 31% of expected revenue lift from digital transformations. True ROI requires fixing broken business rules and aligning technology directly with your primary value chain.
How should a CFO calculate the ROI of cybersecurity investments?
Measure it through risk reduction, downtime avoided, resilience improved, and EBITDA protected. With the global average breach costing $4.4 million, cybersecurity is not just a software line item. It is business protection.
Who should ultimately own the organization’s technology budget?
It should be a partnership. While 72% of CFOs lead tech budgeting, Finance and technology need to work together, because the budget sits at the intersection of capital allocation and operational reality.
How does a modernized IT infrastructure affect mid-market company valuation?
It improves trust in the business’s ability to scale, govern, and execute. Clean, reliable environments support stronger margin, lower risk, and a better valuation story. Data shows digital leaders achieve 8.1% average shareholder returns compared to 4.9% for laggards.
Why is it a mistake to delay routine infrastructure upgrades to save money?
Delaying upgrades creates technical debt that eventually cripples operations. The savings are an illusion. Over two-thirds of IT outages now cost organizations more than $100,000. Cheap decisions have a long tail, forcing manual workarounds and putting core EBITDA at risk.