Loading the context…
Loading the context…
A measure comparing the benefit or net gain from an investment with its cost over a stated period.
Save conceptReturn on investment, or ROI, asks how the benefits of an investment compare with what it costs. A simple financial calculation divides the net gain by the investment cost and expresses the result as a percentage. The period and the definition of benefit must be clear, because different assumptions can change the answer.
For a technology project, costs can include the service bill, integration, staff training and ongoing review. Benefits might be cash savings, greater capacity or additional income. Time saved is not automatically cash saved: a business may use freed staff time for more work while paying the same salaries. Measurement should keep those outcomes distinct.
In a hypothetical project costing $100, a measured benefit of $120 over the same period leaves a net gain of $20. Dividing $20 by $100 gives an ROI of 20%. These are illustrative values, not company results. If another $30 of implementation cost was omitted, the original calculation would overstate the return.
ROI is different from adoption, growth or a reduction in a single expense. It also does not by itself show when money is recovered or how uncertain the benefit is. Comparing projects requires consistent periods, costs and benefit definitions; a forecast should remain labelled as a forecast.
Broadcom chief questions enterprise AI returns as financing needs grow