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ROI: Positive Returns

Return on investment (ROI), from a business perspective, is elementary: You spend money with the expectation that you'll make back the same amount, plus some revenue gain. An e-commerce server that costs $20,000 and processes $100,000 in transactions will have a $80,000 ROI, or 400 percent.

Security is a cost center like human resources, the mailroom and facilities; it doesn't generate revenue. Even here, though,

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evaluating ROI is straightforward. You compare actual costs--both known spending and known incident costs--with projected costs, based on assumptions and expectations about what will change with the new product or service. The ROI is savings generated by efficiency. An automated patch management solution, for example, will reduce the time it takes to deploy patches compared to a manual process, resulting in a cost savings.

The same logic is applicable to most any security process: services vs. in-house operations, or help desk vs. manual password resets, IPS and incident reductions. If the savings is greater than the product's TCO, you have positive ROI.

Generally speaking, ROI is gained by increasing the productivity of your IT staff through automation and reducing recurring, predictable incident costs. Frequent incidents and their associated response costs are a factor in some security spending, such as antivirus and antispam, in which ROI is an evaluation of operating costs under different conditions, such as running a network with and without AV.


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About the author
Pete Lindstrom, CISSP, is research director at Spire Security and a contributing editor for our sister publication Information Security magazine.

Note: This article originally appeared on Information Security magazine.
 

This was first published in February 2005

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