ROI framework
A finance-first ROI framework for technology transformation
This framework is designed to help finance leaders build an investment case that is measurable, auditable, and clear about assumptions. It follows common business case practice and emphasizes risk-aware thinking.[1][2][3]
If you want to jump straight into numbers, use the ROI calculator. If you want the formulas and guardrails, see methodology.
Answer box: What is a technology ROI framework
A technology ROI framework is a structured way to estimate benefits, costs, timing, and risk for a technology initiative, using measurable value drivers and clearly labeled assumptions.
- Use a baseline so every benefit has a before-and-after definition.
- Separate one-time implementation costs from recurring run costs.
- Validate the biggest assumptions first, then stress test downside scenarios.
Step-by-step method
Step 1: Define scope and decision
Write down what problem is being solved, what will change, and what decision is being made. A good ROI model ties directly to a decision, not a vague aspiration.[3]
Step 2: Establish the baseline
Document the current state with simple operational measures that you can support. Examples include time to complete the monthly close, invoice processing effort, manual reconciliations, and working capital cycle measures like DSO.
Step 3: Identify value drivers
Use a driver-based model where each benefit is anchored to a measurable mechanism. Common drivers include labor hours saved, close acceleration, AP invoice processing efficiency, headcount avoidance, vendor spend reduction, legacy systems retirement, and working capital improvement.
Step 4: Document assumptions and evidence
For each driver, capture: the source of the data, the rationale, and who validated it. If a number is not known, mark it as an assumption and define how it will be validated.
Step 5: Model costs and timing
Separate one-time implementation costs from ongoing run costs. When timing matters, consider NPV with a discount rate that reflects your company's cost of capital.[4]
Step 6: Address risk and uncertainty
Avoid converting risk into dollars unless you can justify a conservative expected loss proxy. When you cannot, use a qualitative score and provide narrative about what improves controls, audit readiness, and resilience.[1]
Step 7: Stress test the model
A single point estimate is rarely sufficient. Test upside and downside scenarios by changing a small set of assumptions and documenting the effect on ROI, payback, and NPV.[2]
Step 8: Present a decision-ready summary
Provide a one-page summary with top drivers, key assumptions, and what would invalidate the model. Include what is excluded, and why.
How to validate assumptions
- Use time studies, system logs, and ticket data for hours saved estimates.
- Compare close and AP workflows before and after to confirm cycle time changes.
- Confirm DSO math with finance leadership and agree on calendar days versus working days.
- Have process owners sign off on expected adoption and the timeline to realize benefits.
Written and reviewed by Randy Kardas, CPA, CITP, CGMA, MBA
Randy is an accounting and finance professional focused on technology ROI modeling, business case development, and practical analysis that finance teams can validate.
Sources used on this page
Forrester: Total Economic Impact (TEI) methodology
A widely used approach for structuring benefits, costs, flexibility, and risk in technology business cases.
Accessed 2025-12-12
McKinsey: Fostering better decisions through holistic ROI estimates
Discussion of connecting value drivers to decision making and using NPV-style thinking for investment tradeoffs.
Accessed 2025-12-12
Harvard Business Review: The essential components of digital transformation
Highlights why outcomes and clarity matter, and why vague ROI narratives create execution risk.
Accessed 2025-12-12
Aswath Damodaran, NYU Stern: WACC central
Overview and related references for WACC and cost of capital estimation.
Accessed 2025-12-12