‘Bring IT into the boardrooms’ seems to have been a rallying cry for so many months now that one could suppose that the gap between CEOs, CFOs, CIOs and CTOs has shrivelled beyond recognition. And, in a ‘do more with less’ economy, surely ROI is a three-letter mantra for all concerned.
Yet, only last fall, CIO Canada published news that although 79 per cent of Fortune 1,000 IT decision-makers agree that financial justification of IT projects is important, only 40 per cent conduct business case analyses on a regular basis, according to New York-based Ernst & Young LLP.
The reason cited for the lack of business case follow-through was that IT decision-makers often lack the tools, resources and time to conduct a full-blown ROI analysis for most IT projects.
Sometimes the cost is already justified by the necessity for some operational capability or obvious competitive advantage.
While IT is used to some extent by nearly all industries and all players within those industries, it does not appear that a business/IT convergence is over or that the way to exploit IT for business value is well-understood, suggests Gartner analyst Audrey Apfel in the January issue of CIO U.S.
“Although many approaches dig deep trying to ensure alignment of the IT solution with the business, there is no common language for communicating value across the business-IT chasm, and each approach is left essentially starting from scratch,” she writes. “IT people talking about the business is not the same as business people talking about the business. Real business benefits can only be determined and ‘owned’ by the responsible parts of the business.”
Apfel notes that the quest to determine the ROI leads some people to vendor-developed tools and others to outsourcing cost/benefit studies. The former is typically suspect; the latter costly and time-consuming.
Gartner promotes what it calls a “total value of opportunity (TVO)” approach that uses the traditional language of business. Apfel describes this as a metrics-based approach to measuring business performance, and includes risk, time and an assessment of an organization’s ability to convert projected value into actual business benefit.
The methods to measure ROI vary but the need to do so is as crucial as gaining a strong, swift ROI in the first place. Apfel notes that in more than 80 per cent of the projects Gartner followed, after the business initiative was launched, the project was not monitored or benchmarked against the original projected benefits.
Whistling in the dark is not a rational choice.