“What is the ROI?” the CFO asks. The presentation went well, the strategy is convincing, but now comes the question that matters. You inhale. “The project doesn’t save us direct costs. But it makes us future-proof. It reduces risks. It improves employee retention. It strengthens our market position.” The CFO leans back. “So no ROI?” “Yes. Just not in euros and cents.” The silence in the room says it all.
Most truly important transformation projects do not have a direct, quantifiable ROI. This is not a defect; it is a feature. Transformation means doing things differently before it becomes absolutely necessary. And that doesn’t pay off in quarterly figures.
A CFO I worked with put it succinctly: “I’m not rejecting the project because I don’t see the value. I’m rejecting it because I can’t defend the value when the supervisory board asks.” The problem was not a lack of insight, but a lack of a basis for argumentation.
The logic is simple: Investment X leads to saving Y. The problem: For most transformation projects, this calculation does not work.
You modernize your IT architecture. The new platform costs 2 million euros. What does it save? Nothing directly. It does the same as before, just faster, more scalable, more maintainable. But the IT budget doesn’t decrease. The number of employees remains the same. Or you implement a modern data management system for 1.5 million. What does it bring? Better decisions. Faster analyses. Less manual work. But no jobs are cut, no process is eliminated.
The value is real. But it doesn’t fit the formula. And that’s why these projects lose out to initiatives that bring “real” savings. IT modernization is postponed. Data management is canceled. The organization remains where it is and pays the price later when tech debt limits its ability to act.
Intangibles are not “nice to have.” They are not “soft factors.” They are real values that manifest in four categories.
Risk Avoidance. Your legacy system is 15 years old. It works, mostly. But there’s no more support. The few people who understand it are retiring. A critical failure could cripple your business for days. You modernize the system. Cost: 5 million. Savings: Zero. But you avoid the risk of a total failure that could cost you 50 million. That’s value, just not the value that appears in an ROI calculation.
Speed. You implement agile working methods. Costs: training, new tools, advisory. Savings: None. But your time-to-market is halved. A new product that used to take twelve months now takes six. You react faster to market changes. You seize opportunities that you would have missed before. Speed does not generate direct cash flow. But it creates options. And options have value.
Future Viability. You invest in further training for new technologies. Costs: hundreds of thousands. Savings: None. But you build competencies without which you will no longer be competitive in three years. Your competitors have to expensively buy in external service providers. You have the know-how internally. Your talent stays because they can learn and grow.
Regulatory Compliance. You implement a new compliance management system. Cost: 1 million. Savings: Zero. But you avoid penalties, reputational damage, and business losses due to regulatory violations. In regulated industries, this is not optional. Compliance projects, by definition, do not have a positive ROI, but they have enormous value in risk avoidance.
| Value Category | Typical Argument | What the CFO Hears |
|---|---|---|
| Risk Avoidance | “We avoid a total failure.” | “What exactly does the failure cost? How likely is it?” |
| Speed | “We will be faster to market.” | “How much revenue does that bring us? In what timeframe?” |
| Future Viability | “We need this for tomorrow.” | “What happens if we don’t do it? When exactly?” |
| Compliance | “We have to do this.” | “What does non-compliance cost? How real is the risk?” |
Intangibles cannot be quantified with the same precision as classic savings. But they can be plausibly estimated without feigning accuracy. Three approaches have proven effective in practice.
First: Calculate negative scenarios.
If you need to justify risk avoidance, calculate the avoided downside risk, not the positive ROI. Example IT modernization: system failure, 20 percent probability in the next three years, cost 50 million (revenue loss plus reputational damage). Expected damage: 10 million. Investment in modernization: 3 million. Avoided expected damage: 7 million. This is not an exact calculation. But it is a plausible argument that makes the value tangible. “Without this project, we risk…” is a phrase that boards understand.
Second: Make opportunity costs visible.
If you need to justify speed or future viability, calculate lost opportunities, not direct savings. Example: Time-to-market currently twelve months, after transformation six months. Market window for new products: often only nine to twelve months. Historically two to three missed opportunities per year, average revenue per missed opportunity: 5 million. You don’t save costs. But you unlock opportunities that you systematically missed before. This is also not an exact calculation. But it shows: The value is real. Additionally, you can make the counter-calculation: “We can invest now, or we can pay three times as much in three years if we come under pressure.”
Third: Use proxy metrics and benchmarks.
If you need to justify factors like employee retention or decision quality, use key figures that correlate with hard numbers. Example: current fluctuation 15 percent per year. Replacement costs per employee: one and a half annual salaries (recruiting, onboarding, productivity loss). Expected reduction due to better working conditions: 5 percentage points. The saving can be calculated. If you don’t have your own figures, use industry data or studies as a plausibility check, with clear disclosure of assumptions. The organizational research institute Gallup quantifies the costs of low employee retention at 18 to 43 percent of the annual salary per lost skilled worker. Such data gives weight to your arguments.
Your task is not to deliver the perfect business case. Your task is to translate the value so that a board can make an informed decision. And that means: transparency about assumptions, not feigned accuracy in numbers.
Numbers are important. But the way you present them is more crucial. A CFO accepts uncertainty if it is communicated honestly. They reject feigned accuracy, even if the numbers look good. Don’t say: “This project has an ROI of 127 percent.” Say: “This project avoids expected risks of 10 million with an investment of 3 million. The 10 million is based on the following conservative assumptions.”
Don’t present a single number, but a set of scenarios: best case (if everything goes well), base case (most likely scenario), worst case (if things get difficult). This shows that you have thought it through and provides guidance to the board.
And shift the discussion away from “ROI or not” to “strategically correct or not.” Some investments cannot be justified in quarterly figures because their value lies in the future. The question is not whether the ROI is positive, but whether the organization will still be competitive in three years without this investment.
Take your next project without a clear ROI and answer three questions for each of the four value categories.
If you have a plausible number for at least two categories, you have a business case. If you cannot fill a single one, you either have the wrong project or you don’t understand the value well enough.
The most frustrating truth about intangibles is that the projects that are hardest to justify are often the most important. Risk avoidance, future viability, speed, compliance – these are not luxury expenses. They are strategic investments whose value only becomes apparent when they have not been made.
The most expensive projects are not the ones you approve. They are the ones you reject because no one could translate the value into the right language.
Tomorrow, take your most important project without a clear ROI and calculate a negative scenario: What will it cost if you don’t do it? The answer is often more convincing than any ROI calculation.
Measure what matters – Not everything that matters can be quantified. But what is important must still be measured.
The Art of Saying No – Those who build a convincing business case also need the courage to reject projects without a business case.
Proven tools and models for self-application are available under Solutions.
If you want to take these thoughts further for your company, a no-obligation initial conversation is worthwhile.
