Due to recent economic pressures, it is imperative, now more than ever, that newspapers cost-justify their IT purchases.

Not only does GDTNova provide state-of-the-art e-commerce solutions, we also provide newspapers valuable information on how to calculate potential return on investment (ROI) in order to cost justify the tools needed to increase ad volume and revenues

ROI - Return on investment as a measure

Return on investment (ROI) is a measure of the monetary benefits obtained by an organization over a specified time period in return for a given investment in a particular software solution, in this case AdEZ.  Looking at it another way, ROI is the extent to which the benefits (outputs) of the solution exceed the costs (inputs).

ROI can be used both to justify a planned investment and to evaluate the extent to which the desired return was achieved. However, it cannot measure all aspects of success:

• whether advertisers benefited from  the training or not
• the numbers of students participating in the training
• the extent to which students' personal objectives were achieved

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The process of calculating ROI
To calculate ROI you must first make estimates or obtain measurements of the costs and benefits associated with the solution.  As you will see, the calculation of ROI is then a relatively simple process. Let's start with the costs …

Forecasting and measuring costs

Design and development costs
The first category of cost to be considered is the design and development of the software,  whether this comprises the standard GDTNova solution or a combination of standard and optional functionality,  You will need to consider:

• internal days of design and development of the site survey.
• costs of external designers and developers
• other direct design and development costs (purchase of hardware, travel, expenses, etc.)
• outright purchase of software and services.

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Promotional costs
Most organizations devote exceptional effort to promoting their GDTNova solutions.  This second category takes promotional costs into account:

• internal days of promotional activity
• costs of external agencies
• other direct costs of promotion (posters, brochures, etc.)

Administration costs
An allowance must be made for the time taken by newspaper personnel in attending the GDTNova comprehensive training program.  This will typically be a factor of the number of students:

• hours of administration required per student
• direct administration costs per student
  (joining materials, registration fees, travel, expenses, etc.)

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Evaluation costs
You also need to make an allowance for the time spent evaluating the solution, whether this is an ROI analysis or some other method.

Forecasting and measuring benefits

Let's look at the major categories of benefits. Note that these categories are not necessarily mutually exclusive - in some respects they provide alternative ways of looking at the same underlying benefit. Because of this, you should be extremely careful not to include the same basic benefit under more than one of these headings.

Increased Advertising/Lineage/Revenues
GDTNova provides software and hardware solutions to over 200 daily and weekly newspapers around the world while supplying corporate entities such as Gannett Corporation, The Tribune Co.,  Knight-Ridder Corporation, Hearst Corporation, A.H. Belo, and United Media.  Data has shown that advertisers like the ability to place advertisements when it is convenient for them to do so.  Consequently, this has given rise to an increase not only in the amount of ads and linage but also directly proportional increase in ad revenues.

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Cost savings/Preserving System Investments
Due to the open connectivity of GDTNova’s ConneX Server, your computing systems have an extended life. New features can be easily added to provide future requirements. New and emerging technologies can be implemented without scrapping existing equipment and software or disrupting users and operation. The initial investment in your system is preserved while its functionality continues to grow.

Examples of cost savings include:

Platform independent.
The ConneX Server is platform independent. By avoiding a dependency on specific operating systems, the ConneX Server ensures optimum interoperability with other business systems and eases the training burden for system administrators.

• The ConneX Server is developed completely in Java and can operate in various operating system environments.
• Utilizes the functionality of existing business systems.

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Cost savings/Staff
Cost savings occur where, as a result of GDTNova solutions,  no effort is needed to achieve and sustain increased advertising.  Since transactions are 100% interactive with the front-end classified system, no personnel from the call center are required to consummate the business.  There is a small percentage (15 – 20 seconds/ad) required for advertising personnel to review the ads for content and policy.

Examples of cost savings include:

• reduced duplication of effort
• less time spent correcting mistakes
• no more write-offs due to mistakes

Productivity increases
Productivity increases occur where, as a result of the GDTNova solution,  additional output can be achieved within the call center with the same level of effort. This implies that the organization requires or desires more output in this particular area. Examples of productivity increases include:

• more time to proactively solicit new business
• more time to follow up on customer call-backs
• reduce number of abandoned calls due to increased staff availability/efficiency.

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Calculating return on investment
Return on investment tells you the percentage return you have made over a specified period as a result of investing in a GDTNova solution. On the assumption that benefits will continue to accrue some time after the solution is launched,  then the period that you specify is critical to the ROI figure you will obtain. You may like to specify a period that fits in well with your organization’s planning cycle – perhaps a year or two years.

It is relatively simple to calculate return on investment:

% ROI = (benefits / costs) x 100

Payback period
Another way at looking at ROI, is to calculate how many months it will take before the benefits of the GDTNova solution match the costs and the solution pays for itself. This is called the payback period:

payback period = costs / monthly benefits

Payback period is a powerful measure. If the figure is relatively low – perhaps only a few months – then management will be that much more encouraged to make the investment. As a measure, it also has the advantage of not requiring an arbitrary benefit period to be specified.

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Simplifying the process
If you've been following through all of these steps, then you'll have realized just how many calculations are involved in conducting a thorough analysis. What's more, when you start to look at areas such as opportunity costs and productivity benefits, there are many concepts involved.  At GDTNova, we simplify the process by:

• Providing sample data from some of the 200 sites that currently employ GDTNova solutions.  This data allows newspapers to “see” the result trends needed for the ROI calculations.

• Work with newspapers on various purchase plans in order to cost justify the solution and maximize the ROI.  GDTNova employs ASP pricing, purchase pricing, leasing and revenue share pricing models.

• Assist newspapers in the Design and Development process in order to minimize costs.  GDTNova provides a detailed Product Description Document (PDD) and site survey.  This minimizes the Design and Development cycle and reduces the time-to-market of the solution.

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