Time to PONI up

When you're thinking about ROI think about about this: $US1.65 million. That's how much each of five Wall Street investment houses will pay as part of a settlement stemming from their inadequate systems for archiving old email messages.

Here's a new number to keep in mind for when you're thinking about ROI: $US1.65 million. That's how much each of five Wall Street investment houses will pay as part of a settlement announced with the US Securities and Exchange Commission, stemming from their inadequate systems for archiving old email messages.

Or maybe ROI isn't the right acronym. This isn't really about return on investment. It's about PONI: the price of non-investment. These Wall Streeters didn't invest in good email archiving systems. Now they'll have to -- after they pony up $US8.25 million in fines.

Did these brokerages really ignore the SEC's rules for preserving email to and from customers? Probably not. In most cases, the messages apparently were saved.

Trouble is, they were saved on back-up tapes, or on employees' individual PCs, or in places where they might easily be erased -- not in a secure, easily accessible place where regulators can get to them as required. And since that's the point of the SEC's record-keeping rules, the ad hoc approach didn't cut it.

So why didn't Deutsche Bank, Goldman Sachs, Morgan Stanley, Salomon Smith Barney and Piper Jaffray see this coming? Chances are, they just didn't figure they'd get enough ROI from a fancy-schmancy email archive to make it worth the cost of building it.

And who can blame them? We're all a little ROI-crazy right now. ROI is our first-line filter for IT projects. Money is tight. We need cost savings or increased business or both. The projects that show the best ROI get funded. The ones that don't -- well, we'll just have to make do without them.

That's a seductive approach -- so objective, so dollar-oriented. And it's probably an improvement over the decision factors we've sometimes used in the past: political clout, squeaky wheels, most interesting technology, safest bet to finish on time and under budget.

But ROI isn't enough. Especially if we assume there's no PONI.

That's a lesson that should have been learned three years ago, during year 2000 projects. Y2k wasn't about getting a return on investment. Y2k didn't cut costs, or give us a market advantage over competitors, or streamline our operations. Y2k's "return" was just staying in business.

Maybe it's time to start calculating PONI for every project, and factor it in along with ROI when we make each project-funding decision.

If we don't take into account that do-nothing risk, we don't have a true picture of what an IT project is worth to our organisations.

Does that mean you'll have to assess the credibility of some wild and crazy worst-case PONI scenarios? Sure -- just as you already have to throw cold water on ridiculously optimistic ROI projections. You'll have to get business-side users to think realistically about the upside and the downside of all your alternatives.

But make the effort. It could be a crucial part of your business case.

Because as those big Wall Street brokerages learned, some IT projects are worth doing even if there's no actual ROI at all.

And $US1.65 million is a lot to spend on a PONI.

Hayes, Computerworld US' senior news columnist, has covered IT for more than 20 years.

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More about Deutsche BankDeutsche BankGoldmanHayesMorganMorgan StanleySalomon Smith BarneySECSecurities and Exchange CommissionWall Street

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