July 2006 Survey: What's the Value of IT? At Many Companies, It's Just Guesswork.

By Allan Alter  |  Posted 07-12-2006

July 2006 Survey: What's the Value of IT? At Many Companies, It's Just Guesswork.

We begin rolling out the results of our July 2006 survey on business value and ROI with a basic question: are you measuring value at all? The answer, at many companies, is no. And even at companies that do measure value, only about 40 percent of the budget undergoes an ROI analysis. That means many IT executives have no way to provide the answers about business value that CEOs and CFOs want. Other results from our survey—including data on the accuracy of business value and productivity metrics, the kinds of measures companies are using, and whether investments in technologies like web services, RFID and CRM are meeting business value expectations—will be posted online throughout the month of July and early August

Research Guide:

  • Finding 1: Only six out of ten companies measure the business value of IT.
  • Finding 2: Do CIOs measure business value often enough?
  • Finding 3: Skepticism about ROI and business value metrics remains high.
  • Finding 4: IT executives exaggerate IT's impact on productivity.
  • Finding 5: How best to measure IT's value?
  • Finding 6: Many technologies and IT services are meeting, and even exceeding, their business value expectations.

    Read our previous surveys on ROI and business value:

  • ROI 2004: How Well Do You Work with the Business?
  • ROI 2003: Do You Have Any Faith In Your ROI Numbers?
  • ROI 2002: How Do CIOs Figure ROI?

    Related stories:

  • Roundtable: The Trouble With ROI
  • Howard Rubin: How to Measure IT Value
  • Christopher Gardner and Ray Trotta: How to Determine the Value of a Project
  • What Does Wall Street Think of Your Technology?

    Next page: Only six out of ten companies measure the business value of IT.

    Only six out of

    ten companies measure the business value of IT.">

    Finding 1: Only six out of ten companies measure the business value of IT.
    That's a surprisingly low number, given all the resources and importance companies place on technology, and the pressure from CEOs and CFOs to demonstrate value. Small firms are least likely to measure what benefits their IT investments are bringing, but even among big companies (those with revenues over $1 billion), one out of five do no kind of valuation at all, not even such basic ones at cost savings or customer satisfaction.



    Research Guide:

  • Finding 1: Only six out of ten companies measure the business value of IT.
  • Finding 2: Do CIOs measure business value often enough?
  • Finding 3: Skepticism about ROI and business value metrics remains high.
  • Finding 4: IT executives exaggerate IT's impact on productivity.
  • Finding 5: How best to measure IT's value?
  • Finding 6: Many technologies and IT services are meeting, and even exceeding, their business value expectations.

    Read our previous surveys on ROI and business value:

  • ROI 2004: How Well Do You Work with the Business?
  • ROI 2003: Do You Have Any Faith In Your ROI Numbers?
  • ROI 2002: How Do CIOs Figure ROI?

    Related stories:

  • Roundtable: The Trouble With ROI
  • Howard Rubin: How to Measure IT Value
  • Christopher Gardner and Ray Trotta: How to Determine the Value of a Project
  • What Does Wall Street Think of Your Technology?

    Next page: Do CIOs measure business value often enough?

    Do CIOs measure business

    value often enough?">

    Finding 2: Do CIOs measure ROI often enough?
    Pressure to put a dollar value on IT's value is increasing, so it's surprising to find that, on average, only 41 percent of companies' IT budgets undergo an ROI assessment. What's more, only half do an ROI assessment both before and after an IT project is completed. In the financial world, investors look at past performance before making new decisions. Why doesn't IT? True ROI isn't the only way to capture IT value, and measuring accurately is difficult. But CIOs should be doing more quantitative measurements to satisfy their CEOs and CFOs and guide their future investments.

    Read our previous surveys on ROI and business value:

  • ROI 2004: How Well Do You Work with the Business?
  • ROI 2003: Do You Have Any Faith In Your ROI Numbers?
  • ROI 2002: How Do CIOs Figure ROI?

    Related stories:

  • Roundtable: The Trouble With ROI
  • Howard Rubin: How to Measure IT Value
  • Christopher Gardner and Ray Trotta: How to Determine the Value of a Project
  • What Does Wall Street Think of Your Technology?