Monday, June 2, 2008

When ROI doesn't matter

Over the years there's been lots of talk on whether IT investment has been effective or not. Invariably, the conversation comes back to -- in one form or another -- Return on Investment. A recent CIO Insight article (link below) addressed this from a post-project perspective. The article suggested that some CIOs don't measure post-project ROI because they are uncomfortable with what the results may reveal (can you say, "Fear Factor?"). However more evidence points the fact that CIOs simply are not measured on post-project ROI. As the article states: "Meanwhile, we found little evidence that ROI accountability was a consistently high priority among CEOs ... And while all the CIOs we spoke with said they needed to project ROI to receive funding, only [one] stressed that his CEO ... consistently held him accountable for achieving ROI."

I am not sure I completely agree with either position. I believe that, given time to think about the issue, most every CFO and CEO would love to know whether their IT spending is delivering on the promises laid out in the ROI justification. It's why that opportunity almost always scores high on executive surveys. At the same time, such questions are rarely a matter of urgency. In other words, the executive looks at the overwhelming pile of work laid at her feet. Somewhere in that pile is the post-project audit.... somewhere under last month's sales report, the competitive SWOT analysis, the contract review from legal, and the proposed agenda for next week's management team meeting. If she gets free for a half-hour, she might read it. On the other hand, she just want to get a cup of coffee.

Executives, including CIOs, focus on what is ahead of them, not on what is behind. If someone is really clamoring for an ROI analysis of the project completed 6 months ago, it's because that someone either believes the project failed, or because they suspect they've been hoodwinked into funding an IT gadget shopping spree. And at that point, the objective of the audit isn't to verify success, but to assign blame.

To read the CIO Insight article, click here: ROI: Why Don't More CIOs Measure ROI After a Project Is Up and Running?

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