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Is it possible to ROI a project to death?

Is it possible to ROI a project to death?

Despite perceptions that IT projects today are "ROI'd to death", organizations are still struggling to control demand for IT services and allocate scarce resources to where they are of most value.

Despite perceptions that IT projects today are "ROI'd to death", organizations are still struggling to control demand for IT services and allocate scarce resources to where they are of most value.

According to Compuware Australia/New Zealand regional director, Michael Green, there are plenty of IT projects that still receive funding when they shouldn't with organizations constantly weighed down by having to maintain applications they should pull the plug on.

"While return on investment (ROI) is almost mandatory when it comes to large strategic IT projects, many smaller projects and the vast majority of existing applications are not subjected to the same levels of scrutiny," he said.

"ROI is a great indicator of success but if it's not used consistently organizations cannot compare apples with apples when making IT investment decisions."

Not surprisingly, Green believes organizations could save money on existing IT systems, free up resources to take on more strategic IT projects, and better align their IT expenditure with business objectives by adopting a portfolio management approach to their IT projects and applications.

To reinforce this point, Compuware conducted a survey with a sample of 67 CIOs at a recent breakfast briefing and found only 36 percent have a consistent process for evaluating which IT projects or applications should proceed, while 32 percent have a consistent process for evaluating which should be stopped or re-prioritized.

Green said nine in 10 organizations surveyed are experiencing IT delivery issues. The most common is due to a shortage of skills (57 percent).

"The skills shortage is a major driver for IT portfolio management because there is never going to be enough resources to meet all IT service demands," he said.

"That is why you need consistent methodologies and tools to ensure scarce IT skills are applied where they add the most value."

A similar survey undertaken by the Economist Intelligence Unit had similar results. It found that two in three companies do not measure business-relevant service level agreements, keeping management in the dark about IT's true contribution to business.

Sponsored by BMC Software, the survey of 400-plus senior Asia Pacific business and IT executives, found 24 percent do not formally measure the performance of IT operations. � Moreover, 84 percent of those surveyed say IT could add much more value to the company than it does presently. But for IT to add more business value, management of routine IT tasks must be standardized and centralized.

Currently, this job is done poorly, with survey results showing a spectrum of deficiencies in standardized procedures for recording IT-related incidents - the ability to identify IT infrastructure components and link them to specific business services and the ability to produce quickly an accurate report of IT assets.

Only 47 percent had a standard way of recording incidents while two in five could not accurately report IT assets.

BMC Software A/NZ managing director, Mike Davies, said IT managers must be able to respond from a business, rather than a technology, point of view.

"You simply can't do that without standardization," Davies added. About 48 percent of all senior executives say that in their organization IT often faces conflicting priorities among other business functions.

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