ROI 2002: How Do CIOs Figure ROI? - ' Conclusion 02 '
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Conclusion 02: Methods
CIOs use a wide assortment of ROI methods, but measuring cost reduction is by far the most popular. Even so, there's no sign that any single method works well for all organizations and situations. However, IT execs who supplement traditional metrics with more sophisticated ones tend to have more confidence in their measures.
Cost reduction is the most commonly used ROI method, at 77%, followed by customer satisfaction, at 57%, and productivity improvement, at 56%. At 55%, IT's impact on profits and earnings is a more commonly used ROI metric than revenue gains, at 36%.
There are few differences between more and less confident execs in the use of traditional metrics such as customer satisfaction. However, execs with confidence are more likely to supplement traditional methods with such sophisticated measures as economic value added (43%), activity-based costing (44%) and internal rate of return (42%).
Just 59% of respondents believe they're using the right approach to assess IT's business value. But even the more confident execs have doubts: fully 54% of them feel their metrics aren't complete.
Seventy percent of more confident execs measure the benefits IT brings to the company's strategic goals, versus just 39% of less confident execs.
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