Return on Investment does it exist

I was reading my regular assortment of information today and ran across a great blog from Joe McKendrick.  In the article Joe talks about the mythe of ROI in the motivation of IT projects.  The hardest part of figuring out any return is to properly capture present state and then be able to capture the effect of the change on the business.

As he mentions, there are many drivers in business that are hard to find a direct return.  One of my favorites was always "Customer experience – do they really buy more or cost less".  Indirect value propositions are hard to monitor.  If I send a coupon and ask for the code, I can track the purchase, but would I have bought anyway?  Don’t get me wrong I am a HUGE believer in customer experience – it is the Brand – the experience of value.

The challenge is that when someone finds a business value that is a hot button in support of corporate strategy, often they squeek projects in that are not really driving the value – just a favorite way to get projects approved.

As many acronyms and buzz words get invented, accepted and overused we need to be careful.  But more importantly we need to educate everyone in the value chain how this works.

  1. Jim Reply

    It is difficult to really determine the return from many IT projects. The difficult thing is how much does have to do with the project and the failure of operational management to deliver the value. Often the IT group struggles to assess value of a project but really the people using the system deliver the value. If the operational management is determine to prove the IT group screwed up then it will be a self fulfilling prophecy. That is why the sponsoring management really have to care. Mike Howe, a guru of project management in the 80’s, always said the way to tell the state of a project is to ask the question “Who Cares?”. The answer will be very revealing. There must be somebody on the operational side who really cares and can managed the operational side.

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