We are being bombarded with pitches for expensive AI-driven enterprise software that promises massive productivity gains. How do we build a rigorous, reality-based business case to measure the projected ROI of an AI tool before we sign a multi-year software contract?

Question

Tyler Smith · Accepted Answer

To measure the projected return on investment of an AI tool before signing a contract, you must ignore marketing hype and conduct a reality-based dialogue. Larry Bossidy outlines in Execution that leaders must ask tough, incisive questions about operations and people processes to uncover the ground-level truth.

Start by demanding that the software vendor define the precise operational workflows their tool automates. Then, translate those promises into hard numbers on your weekly Scorecard. Do not accept vague metrics like improved employee satisfaction or enhanced collaboration. Instead, calculate the exact human hours currently spent on that specific operational task.

Ask yourself three questions. First, will this tool allow us to increase our capacity and generate more revenue without hiring additional staff? Second, can we eliminate a specific bottleneck that is currently delaying our delivery cycle? Third, if this tool saves our team members ten hours a week, what specific revenue-generating tasks will we assign to their seats to capture that saved time?

If you cannot tie the tool's cost directly to an increase in capacity or a reduction in planned hiring, do not purchase it. Run this evaluation through your weekly Level 10 Meeting™ to ensure your entire leadership team is on the Same Page regarding the financial reality of the investment.