It has become fairly typical for decision-makers to require
IT to do an ROI study to back up budget requests for technology acquisitions. The
studies are used to help “sell” the project to decision-makers based on value. But
often these studies are not used to their fullest extent to advance the
company’s perspective of IT’s role in the organization.
Too often, once an ROI study is finished and the funding
acquired, they are filed and forgotten. Sometimes this is done out of fear the
studies won’t live up to reality. At other times the studies may be viewed as
having done their work in getting funding approved and are no longer useful.
This is unfortunate because there is still a lot of value left in these studies
that can be used to enhance IT’s role in the organization.
After a project is completed, it’s rare for an organization
to measure the success of those projects using the original ROI study as a
template. Every ROI study factors in multiple cost structures, and each one plays
out differently in the new environment. Some are predictably fixed; others can vary
widely depending on circumstances.
For example, when a technology is being completely replaced,
maintenance for the old technology can be accurately predicted to go away once
the new technology is deployed. New maintenance costs, on the other hand, may
or may not actually match what had been estimated. Implementation labor
estimates can also vary widely. The more complex the technology, the more this
cost element can differ from estimates.
Knowing how each cost element varied from original estimates
can be extremely valuable for IT when doing future studies. If the project does
not achieve the value initially measure, IT can learn from it and adjust
subsequent ROI studies to measure the scenario more accurately
However, when the ROI study proves out by matching the actual
facts, IT’s reputation is enhanced and these facts can be advertised to the
user community at large. Similarly, if valuable use cases were developed, these
can also be used to advertise IT’s success. The communication of success can
build a loyal user community for future projects.
IT depends on the user community to help make a new
technology a success. If the user community is a friend of IT, they will go out
of their way to ensure a project succeeds. This becomes a virtuous cycle and drives
tremendous value for the business.
Additional value can be extracted from these previous studies
when the next request for project funding comes in. The new request can be
backed up by historical evidence of success, helping persuade decision-makers
to approve the new funding.
IT doesn’t have a lot of spare time. Many things
that would be nice to do are often
sacrificed because activities that need
to be done take precedence. Measuring the success of a completed project is
an activity that too often falls into the “nice to do” category, but given the
value it can bring to the organization, it should really be placed in the “need
to do” category. By making it a requirement to evaluate success after each project,
you can make sure that every ROI study is leveraged for maximum IT value.
The scrutiny that decision-makers apply to ROI results
typically are confined to the numbers. This is especially true if unquantified
business value is not included with the ROI study. What is hidden and seldom
considered is the organizational dynamics that exist behind those numbers.
Accounting for these dynamics can help in the evaluation of the ROI results.
They may hint at an organizational bias either for or against the new
technology being proposed.
CIOs should take into consideration several organizational
dynamics when evaluating ROI results. At the end of the day a change in
technology can have a big impact on the organization – both positively and
negatively – so it’s important to get it right. Let’s take a look at some scenarios
where organizational bias might negatively influence an ROI study. (Note that each
point can be flipped to show the opposite organizational dynamic and lead to
overly optimistic results.)
For instance, when the current technology experts are
nearing retirement, an unfavorable assessment may actually indicate that these
individuals would rather stay with the technology they’re comfortable with.
Change would take older experts out of their comfort zone and create more work
for them. They could suddenly become novices when new technologies are
introduced. On the other hand, new technologies tend to favor younger professionals,
who are eager to enhance their skills and career prospects. Younger
technologists can be catapulted to a new position of importance. However, they
tend not to be high in the pecking order, so their opinions may have less
Managing the support model for older technologies can be easy
task for those who have an intimate knowledge of the older technology,
especially if it’s fairly stable. Though life may be busy, it can have little
stress since resolving issues has become second nature to the support team.
Work is predictable and it’s easy enough to show that no one is standing around
with nothing to do. By contrast, new technology can require less effort to
operate, so many employees may want to avoid a scenario where more is expected
from them – or worse, where they may no longer be needed.
When a technology has been used by an organization for an
extended period of time, its technology experts can develop very close
relationships with their vendors. This can be good when the relationships turn
into partnerships that help the organization. But when the relationships become
too cozy, vendors may begin to exert undue influence. For example, they may
convince organizations to stay with the vendor’s solution even if it’s outdated
or lacks advanced capabilities that could help the company achieve its business
Not all IT organizations fit neatly into the
scenarios described above, but they can give CIOs insight into why some
employees may resist moving from an existing technology. Of course, there are
legitimate reasons for staying with an older technology, and all of them should
be fairly evaluated. But CIOs and other decision-makers should also consider the
backdrop of organizational dynamics that could unfairly influence the position
to stick with the old technology.