2006 Baseline/The Hackett Group ROI Awards
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The winning projects in the Baseline/The Hackett Group ROI Leadership Awards pulled in relatively quick returns with hosted, Web-based systems.What's the measure of success? Call us old-fashioned, but we think an information-technology system should deliver more value to an organization than it costs to put in and maintain. That's the classic definition of return on investment, and it was the key metric used to select the winners of the 2006 Baseline/The Hackett Group ROI Leadership Awards.

All entrants submitted detailed, three-year cost and return information on a significant information systems project. In addition, this year we required that the results be verified by the company's finance department. The entries were then analyzed and validated by The Hackett Group, a business and technology research and consulting firm based in Atlanta.

The winner: The U.S. unit of camera maker Nikon, which saw major benefits with a customer relationship management project that yielded a plump 3,203% return. We also selected a solid runner-up, Kennametal. The industrial tools manufacturer used an e-procurement system to encourage employees to buy from preferred suppliers, saving an estimated $2 million over three years. Kennametal's three-year ROI: 161%.

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Both companies, notes Erik Dorr, senior business adviser at The Hackett Group, "utilized Web-based technologies, delivered benefits relatively quickly and involved process transformation rather than just automation."

Because the projects were geared around hosted applications, Nikon and Kennametal had relatively low startup costs and, as a consequence, saw fairly swift ROI.

"When you have an on-demand solution, your monthly fees are far less than if you bring a full ERP [enterprise resource planning] system in behind your firewall," says Jim Cebula, Kennametal's director of global purchasing and travel, who oversaw the e-procurement project. "Our infrastructure support cost is Internet access. We have no I.T. depreciation at all."

Of course, not every software-as-a-service project will be a winner. But if a project isn't working out the way a company expected—if, say, you're heading into negative-ROI territory—it's less painful to pull the plug on a hosted application.

Read about the 2006 winning projects:

Nikon: Aiming to Please

Kennametal: Attention, Shoppers!

Read about previous years' winners:

2005 Winners: Internet Leaders

2004 Winners: Off-the-Charts Results

2003 Winners: Extreme Returns

How We Picked the Winners
All entries were independently judged for accuracy, validity and completeness by The Hackett Group, a strategic advisory firm that provides best-practices research, benchmarking and business-transformation services. The company, a subsidiary of Answerthink, specializes in analyzing performance of sales, general and administrative and supply chain activities, and has published 3,500 benchmark studies over 14 years.

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