Real return on investment

IT departments are spending a lot of time and effort to justify new projects by analyzing their potential "return on investment." While this financial due diligence is a good thing, an interesting phenomenon that seems to happen once the project receives the blessing of the company's financial honchos, is that ROI disappears from the landscape.

Once the numbers have been diligently compiled and the project approved, the financial exercise abruptly stops. It's amazing to me that once a company has decided to make an investment, the next logical step of measuring the actual return on investment is generally not done.

In other words, ROI is being used merely as a means of justification. But it seems to me that once you've made the financial commitment, you should see what the real financial benefits/returns are. In many cases, IT departments are not collecting this valuable information that could provide insight into the efficiencies gained through implementing better tools.

For example, if a better event correlation engine is implemented, what are the actual savings in terms of labor that could be deployed elsewhere? In practice, some of the labor savings are hidden, because staffers who have more time on their hands are still on the payroll but they are doing other tasks. Even worse, many IT organizations don't have any idea of how much time or money they saved by implementing a more efficient management tool. This is an important factor that should be measured, which would provide insight into the costs of management tools. In some cases, the difference in support costs between competing products could be fairly significant. Built-in intelligence and automation are some of the functions that could help to reduce the cost of management.

After a management tool has been deployed, if you ask IT staffers how much time or money they saved as a result of the tool, you may get nothing but blank stares. We run into this quite often when speaking with users. In some cases, they have a gut feeling that they have saved time, but they don't have a clue how much.

It seems to me that this kind of information would be more useful than the initial ROI projections. If the added productivity provided by management tools could be quantified, it would be much easier to justify the next project with actual data instead of estimates.

If implementing a self-help portal for employees to use when they've forgotten their password reduces help desk calls by 20%, those savings could be used to help bolster the justification for a broader employee self-help portal. Real numbers provide a better idea of how much of a return to expect, and consequently may help to justify a larger expenditure on actual data rather than conservatively estimated data.

Don't leave ROI at the door once the project is approved. Be sure to quantify the actual savings and benefits that are realized from an IT investment. Don't miss that opportunity to show how effective IT spending can be.

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Dennis Drogseth is a director with Enterprise Management Associates, a leading analyst and market research firm based in Boulder, Colorado, focusing exclusively on all aspects of enterprise management. Dennis has extensive experience in network management platforms and products and is researching trends in management software and changing IT roles internationally. His 18-plus years of experience in high-tech includes positions at IBM and Cabletron. He has been quoted in the press and is a speaker at industry events. He can be reached via e-mail.

Audrey Rasmussen is a research director with Enterprise Management Associates in Boulder, Colorado, a leading analyst and market research firm focusing exclusively on all aspects of enterprise management. Audrey has more than 20 years of experience working with distributed systems, applications and networks. Her current focus at EMA is e-business, SMB/SME and MSPs. She can be reached via e-mail.

Enterprise Management Associates in Boulder, Colorado, is a leading analyst and market research firm focusing exclusively on all aspects of enterprise management software and services.