Payback periods - what’s an ideal one?

One of the interesting themes to emerge from my evening at Green Mondays last week was payback periods. In our ever more cost conscious times it’s not much of a surprise that even more consideration is given to the bottom line and the amount of time it takes to recoup up-front investment. When the question was raised at the round table I sat on - what paybacks periods are clients demanding? - there were mixed reactions.

It seems pretty random. One consultant voiced 12 months as one that is increasingly being demanded. Another claimed that a leading construction client - one of UK’s largest retailers - has the rather random period of 39 months as its threshold. I then met a client later on in the evening who said he was set the rather more rounded figure of 18 months. I suppose a lot of the debate and consideration comes down to risk  - that of the certainty of the technology used, if that’s what you’re relying on.

It would presumably be helpful to gain some more certainty on the periods, say for particular solutions or systems. But it must come down as much to softer issues such as the attitude of the client as the hard stuff such as data and evidence. Irksome as it may be we’re set for a rocky period of varied and random payback periods. Any thoughts/experiences?

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