Does ROI begat ROI, or smoke and mirrors?

ROI is the sacred ritual that many managers need to undertake to justify moving projects forward. Do standard ROI measures really capture the true value of an IT project? Or is there a better way?

For every IT project of any size, ROI has been the guiding force of cost justification. In a recent article in InfoWorld, however, the unthinkable question is asked: 'Does ROI matter?'

Over the years, I have spoken to many IT managers and CIOs, and, frankly, many have not had the hard numbers to show the value of projects delivered to their businesses. The advantages of new deployments were seen in light of softer measures -- faster system response times to customers, better ease of use, better IT productivity and the like.  

David Linthicum, CEO of Bridgewerx (formerly of Grand Central Communications), says there aren't enough efforts made to attach ROI numbers to new IT architecture projects. "While it's appropriate to approach new technology with fervor and excitement, we also need to figure out the business case."

However, Gene Rogers, chief technologists for Transformational Space Systems at Boeing, says making hard-number projections, or post-implementation calculations, tend to either dampen opportunities or get twisted out of proportion. "Management by algorithm is the least effective way to run a company," he said. "As an IT executive, you have to manage the ROI hot-button metric as simply one of the many deliverable end products by which IT adds value to the company. However, don't confuse satisfying the board and investors with measuring the effectiveness of your IT organization."

"Metrics are a good thing as long as they are interpreted as indicators, not precise measures," Rogers said.

Linthicum points out that it's important to "learn how to quantify the benefits of any business unit. It's just good business to attribute value to those components of a business; IT is no different."

ROI is the sacred ritual that many managers need to undertake to justify moving projects forward. Do standard ROI measures really capture the true value of an IT project? Or is there a better way?