There's more to measuring IT than ROI: surveys

Looking at return on investment in isolation doesn't accurately gauge progress

Despite the perception that IT projects today are “ROI’ed to death”, organisations are still struggling to control demand for IT services and allocate scarce resources to where they are of most value.

According to Compuware’s Australia-New Zealand regional director Michael Green, there are plenty of IT projects that still receive funding when they shouldn’t, with organisations constantly weighed down by having to maintain applications they should pull the plug on.

“While return on investment (ROI) is almost mandatory when it comes to large strategic IT projects many smaller projects, and the vast majority of existing applications, are not subjected to the same level of scrutiny,” he says.

“ROI is a great indicator of success, but if it’s not used consistently, organisations cannot compare apples with apples when making IT investment decisions.”

Not surprisingly, Green believes organisations could save money on existing IT systems, free up resources to take on more strategic IT projects and better align their IT expenditure with business objectives by adopting a portfolio management approach to their IT projects and applications.

To reinforce this point, Compuware recently conducted a survey using a sample of 67 CIOs and found only 36% have a consistent process for evaluating which IT projects or applications should proceed, while 32% have a consistent process for evaluating which should be stopped or re-prioritised.

Green says 90% of organisations surveyed are experiencing IT-delivery issues. The most common is a shortage of skills.

“The skills shortage is a major driver for IT-portfolio management because there is never going to be enough resources to meet all IT service demands,” he says.

“That is why you need consistent methodologies and tools to ensure scarce IT skills are applied where they add the most value.”

A similar survey undertaken by the UK’s Economist Intelligience Unit produced similar results. It found that two in three companies do not measure business-relevant service level agreements, keeping management in the dark about IT’s true contribution to business.

Sponsored by BMC Software, the survey of 400-plus senior Asia-Pacific business and IT executives found 24% do not formally measure the performance of IT operations. Moreover, 84% of those surveyed say IT could add much more value than it does presently.

The survey results showed a spectrum of deficiencies in standardised procedures for recording IT-related incidents — only 47% had a standard way of recording incidents, while two in five could not accurately report IT assets.

Mike Davies, BMC’s Australia-New Zealand MD, says IT managers must be able to respond from a business rather than a technology point of view.

“You simply can’t do that without standardisation,” he says. About 48% of executives surveyed say that in their organisation IT often faces conflicting priorities with other business functions.

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