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Appendix A. Case 1: Reducing the Cost of Web Site Development and Maintenance

In order to better understand the problems and issues of ROI analysis, the Center for Technology in Government decided to use a form of ROI analysis for one of its own IT investment projects. The Center’s mission to build and disseminate knowledge about IT uses in government usually leads to projects with other organizations. But this case provided an excellent opportunity for learning and knowledge building as part of the Center’s own internal work. The Center’s Web site is a critically important tool in disseminating information and maintaining contact with colleagues and customers.

During the time covered by this case, the Web site consisted of approximately 3500 pages and experienced over 1000 visitors per day. The Web site was supported by a full time Webmaster and part time maintenance and development staff of two professionals and two graduate students who are part of the Center’s Technology Unit. The Web site had been in operation for several years and there was a substantial baseline of experience with development and maintenance using the current architecture. Any investment in new Web site architecture would use internal staff and resources. Therefore, it presented a good opportunity to apply ROI analysis to a realistic problem in a situation where data collection, analysis methods, and the results can be examined at close range.

The purpose of the investment was to change the Center’s Web site from a static, HTML-based architecture, to a dynamic, XML-based one. The problem to be solved was a real one, namely that the Center’s Web site had grown in size and complexity to the point that maintenance and additional development put a serious strain on existing resources. In addition, the static site could not support new formats and capabilities the Center wanted to use on the site.

The Center faced the decision of whether to continue to invest additional human and technical resources in the existing HTML- based static architecture, or change the architecture into an XML-based one that had potentially much lower maintenance and development costs. The change would require a substantial initial investment in tools and staff time to learn how to use XML and related development applications. The ROI analysis would help answer the question of whether the potential returns to be obtained by the use of a dynamic (XML) Web site architecture would exceed the costs of the conversion. The expected returns would consist of savings compared to the costs of maintaining and continuing to develop the existing Web site. Returns would also include the expanded abilities of staff to create enhanced Web site capabilities and features using the new architecture and application tools.

Estimating the potential cost of expanding the staff to maintain the current Web site architecture was very straightforward. However, estimating the conversion costs to a dynamic Web site was a much more complicated problem. A complete ROI analysis should also include an estimate of the savings (if any) to be obtained by using the dynamic architecture. Estimating the savings would require comparison with the costs of maintaining and developing the existing system, so estimating these costs was part of the design.