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Tangled up in numbers? There are easier ways to measure the return on your company's IT investments - and they're gaining in popularity
When it's time to pitch a major new system, Linda L. E. Reino doesn't spend hours with her staff agonizing over numbers.
"It's not a good use of my time," she says.
Instead, about a year before the project gets funded, Reino, chief information officer at Universal Health Services in King of Prussia, Pa., casually starts mentioning its benefits to key business unit heads at the 37-facility health care management company, along with ballpark costs. When budgeting time arrives, she avoids stacks of cost/benefit analyses.
"People spend a huge amount of time and energy on these upfront cost studies, and what do they get?" Reino says. She acknowledges that the approach is a far cry from standard practice at Andersen Consulting, where she spent Io years before becoming Universal's CIO in I992.
Indeed, until recently, such talk was unthinkable. But as companies shift their technology focus from back-office systems and cost-cutting to efficiency and growth, many are looking for new ways to gauge the costs and value of information systems. While total cost of ownership remains a hot topic, more organizations are skipping exhaustive spending projections in favor of speedy, "close-enough" approaches.
Growing numbers of consultants and academics echo Reino's belief. They say that use of return on investment (ROI) analysis -- which in broad terms analyzes tangible benefits minus costs -- still can benefit some information technology projects. But critics say such traditional accounting measures too often are time-consuming, ineffective and unnecessary. They argue that alternafive measures such as "business value-added" and "intangible value" better acknowledge the imprecise and often unmeasurable benefit of IT.
Only about half of IT groups use ROI, estimates veteran consultant and former CIO Ron Brzezinski, a principal at Transformation Associates in Wilmette, Ill. Increasingly, companies view positive returns from intranets and other projects as givens. For example, a recent survey of network managers at 4I companies by Meta Group, Inc., a Stamford, Conn., IT research firm, found that most of them assumed that benefits would follow from projects.
Just as well, because IT metrics for lofty corporate goals - improving supply chains, revenue growth, customer...