Return on Artificial Intelligence
Return on Artificial Intelligence
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  • Our Formula for AI ROI
  • AI Era Glossary
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    • Home
    • About
    • Our Formula for AI ROI
    • AI Era Glossary
    • Insights

  • Home
  • About
  • Our Formula for AI ROI
  • AI Era Glossary
  • Insights

The formula is simple. that's why it works.

Pillar 1: Revenue Impact (R)

Pillar 2: Efficiency Gains (E)

Pillar 2: Efficiency Gains (E)

 

Incremental revenue directly attributable to AI.

Includes:

  • Conversion lift
     
  • Upsell/cross-sell increase
     
  • Pricing optimization
     
  • New AI-driven product lines
     

Measured as:
Incremental revenue vs pre-AI baseline.

Pillar 2: Efficiency Gains (E)

Pillar 2: Efficiency Gains (E)

Pillar 2: Efficiency Gains (E)


Cost savings or productivity lift from AI.

Includes:

  • Labor hours reduced
     
  • Operational automation
     
  • Reduced error rates
     
  • Lower support costs
     

Measured in:
Hard cost savings or productivity-adjusted value.

Pillar 3: Strategic Advantage (S)

Pillar 3: Strategic Advantage (S)

Pillar 3: Strategic Advantage (S)

 

This is where ROAI differentiates from traditional ROI.


Includes:

  • Time-to-market compression
     
  • Data asset compounding
     
  • Competitive defensibility
     
  • IP creation
     
  • Talent leverage
     

This can be scored using weighted modeling if not directly quantifiable.

Pillar 4: Risk & Gov. Cost (X)

Pillar 3: Strategic Advantage (S)

Pillar 3: Strategic Advantage (S)

Pillar 4: Risk & Governance Cost (X)

Often ignored. That’s a mistake.


Includes:

  • Compliance infrastructure
     
  • Security risk mitigation
     
  • Model retraining costs
     
  • Hallucination/error exposure
     
  • Brand risk
     

Subtracting this makes ROAI more credible.

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