Roundtable: The Trouble With ROI

Most IT and business executives we polled say IT is better aligned with corporate strategy. But most agree there's still a long way to go before IT becomes a true strategic partner.
Something is wrong with this picture. In December 2002 CIO Insight surveyed 378 IT executives on their attitudes and practices regarding return on investment. The headline of the results we published in March 2003 sum up our findings: "Do You Have Any Faith In The Numbers?" Even though 60 percent of the respondents said the pressure to demonstrate ROI had increased in the past 12 months, and 76 percent said the pressure to place a dollar value on intangible benefits had increased, many IT executives found ROI to be a frustrating and difficult exercise. Fully 70 percent conceded their metrics don't adequately capture the business value of their projects; indeed, half weren't sure their companies used the right approach. Many simply distrusted their own numbers: 46 percent did not believe their methods were accurate, and 44 percent believed the results of their ROI calculations were subjective.

We were intrigued to find CIOs so dissatisfied with a metric that they are under increasing pressure to use. It led us to wonder just what's causing so much discontent—indeed, whether the concept of ROI needs to reconsidered, or even abandoned in favor of a different way of looking at the value IT brings to companies. And so CIO Insight Executive Editor Allan Alter, on August 11, convened a discussion at the magazine's editorial offices to discuss the problems and limitations of ROI. Participants included CIOs, financial executives and business management experts, including an IT executive who refuses to use ROI at all. Are there viable alternatives?

The following is an edited transcript; For the full transcript please click here.

CIO Insight: Is the often elusive quest for ROI a symptom of a bigger problem, like a lack of trust between the business side and the IT side?

This article was originally published on 11-15-2003
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