IT ROI Is DOA

The past 18 months have witnessed a fanatical focus on ROI. CIOs have sat in meeting after countless meeting where their executive colleagues ask, “What’s the return on investment for this IT project?” The outcome of many of those meetings: The sales exec walks out with the millions previously slated for the IT department. Why? Because the senior vice president of sales can quantify results better than the CIO.

A fun part of my job is meeting with technology vendors who visit CIO. Three years ago every vendor preached “e” this and “e” that. Now it seems every slide in vendors’ PowerPoint presentations promises ROI. This relentless industry focus on ROI means CIOs have lost sight of the big picture. Forget the forest; CIOs are focused only on the trees. No, make that the leaves!

If there were a Webster’s dictionary of ROI, the phrases “long term” and “short term” would be synonyms. In ROI land, there is no true long term. And that could mean serious trouble for CIOs in the future.

Yes, there will be a recovery in IT spending. But there is a crescendo of articles espousing the thought that many businesses will not be ready for it. In the recovery, demand for IT products and services will outstrip the overly conservative IT budgets approved for 2002. Economists are notorious for missing the turns in the economy. The past year has been a rough one, but the upside is coming. CIOs who mindlessly follow the ROI dictates of their management will miss this turn because they have their eyes focused only on ROI speed bumps. Off the cliff they will fall at the turn!

“Businesses are not going to buy the framework of reducing costs [as the main reason for justifying IT expenditures] this year. Everyone is looking for stuff to deliver business value,” says Carl Howe, principal analyst at Cambridge, Mass.-based Forrester Research.

I agree. Want to keep your job? Get off the ROI bandwagon. Author Geoffrey Moore says it best when he quips that the singular focus for CIOs should be on making business cases for how IT investments create or enhance shareholder value.

ROI is DOA. Long live the new king. Start making your business value pitches today.