IT ROI is Fading Fast as a Measure of IT Success
posted by Anna Mar, January 25, 2013Who's going to put IT ROI out of its misery? It simply isn't an effective measure of IT success.
Gartner has tried to put a few bullets1 in it several times. Somebody needs to deal the final blow.
There are 3 reasons that it's time for IT ROI to go.
1. Broken IT ROI predictions
IT ROI predictions don't exactly have a reputation for being accurate.2. The shift from IT CAPEX to OPEX
ROI is only useful for measuring returns on large upfront investments.In recent years many IT organizations have experienced a shift from CAPEX to OPEX. In other words — process outsourcing, SaaS, IaaS and data center outsourcing are reducing IT's upfront costs.
Return on investment isn't a particularly useful measure of recurring operational costs.
3. ROI leads IT to the wrong projects
Every organization has a basket of IT projects to choose from each fiscal year. Choosing your projects by ROI alone leads to bad project choices.For the past 30 years, IT has been heavily focused on automation. IT automation projects are old favorites because it's so easy to calculate ROI for them.
When your automating a manual process your able to repurpose (or cut) the employees who are currently doing all that manual work. There's your ROI!
IT automation was important back in the 1980s when people were running around offices with big stacks of paper. These days, automation projects that transform your business are harder to come by.
Automation is fine, but IT has bigger fish to fry. IT isn't just about efficiency anymore. IT now has the ability to:
improve brand and customer loyalty
engage customers and employees
drive innovation and new products
improve decision making at every level of the organization
These things are far more difficult to measure with ROI. Over focus on ROI leads IT to chose projects that would've had more value in the 1980s — at the neglect of present opportunities.
ROI always seems to be the excuse to choose the least innovative projects.
1http://blogs.computerworld.com/17176/gartner_roi_fading_fast_as_measure_of_it_success (I tried to link this but then noticed it had loads of pop up ads).
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