This financial metric tackles the question: "How do the expected returns from an investment offset the costs incurred in its implementation?". ROI is traditionally applied to several financial metrics, including return on assets, return on capital employed, average rate of return, or simple rate of return for a specific proposal, as demonstrated here. In its simplest case, the investment with the higher ROI is the better option, however there are cautions attached to this statement. ROI assumes the returns are based upon the data and costs in view. As with any model representing a complex system, the answer will be an estimate based on certain assumptions that form consequential caveats. For example, these basic ROI models do not aim to quantify risk, differing project lifetimes or differing returns per FY. The duration of projects here are based upon 1 year returns, so may provide significantly more ROI over the lifetime of the project in subsequent years. Revenue Model The revenue model is the simplest, and asks the question: "What is the user revenue of this application?" This of course is the sum of several sub-sets of user costs and returns, averaged over all users during a typical financial year. The client may find this a useful visually illustrative way to justify performance tuning, based upon simple data inputs representing the average of more complex data. The output graph displays the ROI depending on percentage improvement of the concurrency established on the application by tuning. Perception Model The perception model is based upon user experience and establishes a simple method to emulate user behaviour. It makes the assumption that user load on the system is broken into 12 x 1hr segments, with 2 x peak load hours and 10 x average load hours. In reality we will witness a continuous distribution, with the integral over time representing the total sessions during the day. We also make the assumption that if the user experiences a response time > 8 s, 25% of users will quit the session and move on. In reality this will also be a distribution, and could be modelled stochastically with more complex tools. (blue bars). The model emulates reality with hourly averages that total the integral under the curve but does not show continuous data as in reality. Perception Based Calculator A typical daily load profile is illustrated (white line) and the model Load vs Time 0 50 100 150 200 250 300 350 1 2 3 4 5 6 7 8 9 10 11 12 Hour Users ROI over 1FYk 0 500 1,000 1,500 2,000 2,500 0 100 200 300 400 500 Improvement % . Disclaimer This spreadsheet is provided by IT Service Solutions Ltd. for demonstrative educational purposes only and no warranty or claim of suitability for any other purpose is maintained. IT Service Solutions Ltd. will not be responsible for the application or interpretation of results, the performance of this tool, or any consequences that may arise from its use. Permission to Copy and Distribute IT Service Solutions Ltd. hereby grants permission for users to copy and distribute this spreadsheet tool, only if this worksheet page, including the copyright notice above, is included intact. This spreadsheet tool may not be sold. Copyright 2007, Fortimax Ltd. All rights reserved. Load vs Time 0 50 100 150 200 250 300 350 1 2 3 4 5 6 7 8 9 10 11 12 Hour Users Copyright 2004 Fortimax Ltd Click to visit web site This financial metric tackles the question: "How do the expected returns from an investment offset the costs incurred in its implementation?". ROI is traditionally applied to several financial metrics, including return on assets, return on capital employed, average rate of return, or simple rate of In its simplest case, the investment with the higher ROI is the better option, however there are cautions attached to this statement. ROI assumes the returns are based upon the data and costs in view. As with any model representing a complex system, the answer will be an estimate based on certain assumptions that form consequential caveats. For example, these basic ROI models do not aim to quantify risk, differing project lifetimes or differing returns per FY. The duration of projects here are based upon 1 year returns, so may provide significantly more ROI over the The revenue model is the simplest, and asks the question: "What is the user revenue of this application?" This of course is the sum of several sub-sets of user costs and returns, averaged over all users during a typical financial year. The client may find this a useful visually illustrative way to justify performance tuning, based upon simple data inputs representing the average of more complex data. The output graph displays the ROI depending on percentage improvement of the concurrency established on the application by tuning. The perception model is based upon user experience and establishes a simple method to emulate user behaviour. It makes the assumption that user load on the system is broken into 12 x 1hr segments, with 2 x peak load hours and 10 x average load hours. In reality we will witness a continuous distribution, with the integral over time representing the total sessions during the day. We also make the assumption that if the user experiences a response time > 8 s, 25% of users will quit the session and move on. In reality this will also be a (blue bars). The model emulates reality with hourly averages that total the integral under the curve but does not show continuous data as in reality. Revenue Based Calculator A typical daily load profile is illustrated (white line) and the model This spreadsheet is provided by IT Service Solutions Ltd. for demonstrative educational purposes only and no responsible for the application or interpretation of results, the performance of this tool, or any consequences that <BACK> REVENUE BASED ROI CALCULATOR Enter the average user revenue of the application per FY 2,000 < Enter Enter the maximum number of users that can currently use the system 250 < Enter Enter the maximum number of users that need to be accomodated (SLA) 300 < Enter Current Revenue projection per FY 500,000 Max. Estimate Revenue projection per FY (SLA) 600,000 Estimated additional revenue for minimum 10% scalability improvement 50,000 Estimated additional revenue to meet SLA 100,000 Additional number of users to meet SLA 50 Estimated minimum number of users added due to tuning 25 Tuning to minimum 10% improvement guarantee YES < See Graph - Please Contact Us Tuning in line with SLA or above YES < See Graph - Please Contact Us 10% 10 10 400 1,960 SLA 20 60 CAN PERFORMTUNE PROVIDE ROI FOR THIS APPLICATION ? 500 1,000 1,500 2,000 2,500 ROI over 1FY k . 0 0 100 200 300 400 500 Improvement % <BACK> PERCEPTION BASED ROI CALCULATOR At what user load do transaction response times increase beyond >8s ? From the number of sessions, what percentage of customers make a purchase ? What is the average revenue of purchases in one session ? What is the average concurrency value during a peak hour period ? How many sessions in total are established on average per 12hr day ? Average concurrency over each hour per 12hr day Current revenue projection per FY Max. estimated revenue projection per FY PerformTune Cost Estimated additional revenue for minimum 10% scalability improvement Estimated additional revenue for SLA / Peak scalability improvement Estimated minimum number of users added due to tuning Additional users required to meet peak volumes with good response times Tuning to minimum 10% improvement guarantee Tuning to peak (or SLA) concurrency with <8s response times 10% 10 #VALUE! 400 #REF! SLA #REF! #VALUE! CAN PERFORMTUNE PROVIDE ROI FOR THIS APPLICATION ? 0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000 18,000,000 0 50 100 150 200 250 300 350 400 % Improvement ROI over 1FY K 49275000 800 < Enter # ## 10 15.0% < Enter # ## ## 49 100.0 < Enter # ## ## 100 1,100 < Enter # ## ## 150 12,000 < Enter # ## ## 200 # ## ## 250 980 # ## ## 300 49275000 ## ## ## 350 65700000 # ## ## 400 POA 16425000 80 300 CONTACT US < ROI Inconclusive - Please Contact Us YES < See Graph - Please Contact Us CAN PERFORMTUNE PROVIDE ROI FOR THIS APPLICATION ? 400 450