CIO Best Practices: Enabling Strategic Value with Information Technology

Chapter 8. Managing for Returns on IT Investments

—BY MICHAEL HUGOS AND JOE STENZEL

In a free market economy driven by the competing interests of shareholders and a variety of stakeholders, executive leadership at all levels shares a common accountability: use available resources to achieve the best possible outcome. This book concludes with a discussion of resource decision making that ties together the ever-widening circles of IT influence from its strategic core. IT architecture, tactical agility, and strategic cost, performance, customer relationship, and outsourcing management each enablean organization to align, implement, and realize its strategic objectives. The art (and expectation) of executive leadership is to make decisions that unify and coordinate these many activities and grow the resources that support them.

Unfortunately, conventional ROI calculations were not designed to capture the increasing complexity of the recent emergence and rapid evolution of strategically deployed information technology resources. At the same time, enterprises expect the CIO to make wise investments without understanding the scope of these investment responsibilities. This chapter has two objectives: (1) demonstrate the ways that executive leadership can use conventional ROI calculations to improve decision making for IT project proposals; and (2) explore new perspectives on IT "investments" and arrive at ways that the CIO can help other executives manage and maximize more broad-ranging, ...