Comments on: Still on the Case of the IT Business Case http://andrewmcafee.org/2006/08/still_on_the_case_of_the_it_business_case/ The Business Impact of IT Sun, 14 Mar 2010 01:50:57 -0700 http://wordpress.org/?v=2.8.1 hourly 1 By: vzqarijuo http://andrewmcafee.org/2006/08/still_on_the_case_of_the_it_business_case/comment-page-1/#comment-2538 vzqarijuo Tue, 16 Jan 2007 06:12:54 +0000 #comment-2538 By: hunwdtgrs http://andrewmcafee.org/2006/08/still_on_the_case_of_the_it_business_case/comment-page-1/#comment-2537 hunwdtgrs Wed, 10 Jan 2007 09:11:02 +0000 #comment-2537 By: CTO Blog http://andrewmcafee.org/2006/08/still_on_the_case_of_the_it_business_case/comment-page-1/#comment-2536 CTO Blog Wed, 29 Nov 2006 02:30:11 +0000 #comment-2536 By: Sean Park http://andrewmcafee.org/2006/08/still_on_the_case_of_the_it_business_case/comment-page-1/#comment-2534 Sean Park Mon, 28 Aug 2006 21:07:27 +0000 #comment-2534 Too often, ROI (and similar derivatives) are just artifices for weak management to hide behind in order to avoid having to make real decisions, to avoid having to shoulder the responsibility of true leadership. After all...how can you question ROI?!? (gasp!): numbers don't lie...need to take the emotion out of the decision...we are here to make our shareholders money...etc etc. Wrapped up in this kind of language it is of course impossible to argue against. Of course reality is more subtle. But that doesn't play very well in the hollowed halls of middle management. Better to have easy absolute truths. Shoot the messenger. Shackle the visionary. Spreadsheets over ideas. It's business after all, not some not-for-profit sandbox. But seems to me I can't think of many great companies or products built on the back of some ROI spreadsheet hacked together by committee...can someone show me Larry and Sergey's ROI study? Too often, ROI (and similar derivatives) are just artifices for weak management to hide behind in order to avoid having to make real decisions, to avoid having to shoulder the responsibility of true leadership. After all…how can you question ROI?!? (gasp!): numbers don’t lie…need to take the emotion out of the decision…we are here to make our shareholders money…etc etc. Wrapped up in this kind of language it is of course impossible to argue against.

Of course reality is more subtle. But that doesn’t play very well in the hollowed halls of middle management. Better to have easy absolute truths. Shoot the messenger. Shackle the visionary. Spreadsheets over ideas. It’s business after all, not some not-for-profit sandbox.

But seems to me I can’t think of many great companies or products built on the back of some ROI spreadsheet hacked together by committee…can someone show me Larry and Sergey’s ROI study?

]]> By: Dennis D. McDonald http://andrewmcafee.org/2006/08/still_on_the_case_of_the_it_business_case/comment-page-1/#comment-2535 Dennis D. McDonald Fri, 25 Aug 2006 01:29:52 +0000 #comment-2535 These are all good points. I've used this as a jumping off point for my own consideration of Enterprise Web 2.0 costs: http://www.ddmcd.com/integration_costs.html These are all good points. I’ve used this as a jumping off point for my own consideration of Enterprise Web 2.0 costs:

http://www.ddmcd.com/integration_costs.html

]]> By: Dennis Howlett http://andrewmcafee.org/2006/08/still_on_the_case_of_the_it_business_case/comment-page-1/#comment-2533 Dennis Howlett Thu, 17 Aug 2006 06:08:50 +0000 #comment-2533 I've since revisited this, modified my thoughts and endeavoured to piece together a framework of sorts. What worries me is that folk I thought might have looked at this appear to want to downplay or ignore the need for rigour. I have to say I'm not a fan of Kaplan. Great thinker - but I've not seen what he says work in practice. To me that's the acid test. The new stuff is at: http://www.accmanpro.com/2006/08/16/roi-revista-2/#comment-6657 and I'd certainly welcome your critique. I’ve since revisited this, modified my thoughts and endeavoured to piece together a framework of sorts. What worries me is that folk I thought might have looked at this appear to want to downplay or ignore the need for rigour.

I have to say I’m not a fan of Kaplan. Great thinker – but I’ve not seen what he says work in practice. To me that’s the acid test.

The new stuff is at: http://www.accmanpro.com/2006/08/16/roi-revista-2/#comment-6657 and I’d certainly welcome your critique.

]]> By: gomer http://andrewmcafee.org/2006/08/still_on_the_case_of_the_it_business_case/comment-page-1/#comment-2532 gomer Thu, 17 Aug 2006 02:24:17 +0000 #comment-2532 Would like to comment on the software development component of IT spending and how ROI would really be meaningless in light of the following realities: <i>A study conducted by the Standish Group in 1995 uncovered a striking record of failure in IT projects. Of the more than eight thousand systems projects Standish examined, only 16 percent were considered successes—completed on time and on budget and fulfilling the original specifications. Nearly a third were canceled outright, and the remainder all went over budget, off schedule, and out-of-spec. Large companies—those with more than $500 million in annual sales—did even worse than the average: Only 9 percent of their IT projects succeeded.</i> (taken from: http://hbswk.hbs.edu/archive/4137.html ) Would there be a point in trying to come up with ROI numbers if only 16% of projects are even completed on time and on budget (let alone all those being cancelled or missing the target by a lot for one reason or another.) Measuring a prject by cost and timelines, capabilities anticipated, and technology footprint seems very reasonable and a challenge in itself. Lets hope those managing software projects can do a better job of getting that right. Would like to comment on the software development component of IT spending and how ROI would really be meaningless in light of the following realities:

A study conducted by the Standish Group in 1995 uncovered a striking record of failure in IT projects. Of the more than eight thousand systems projects Standish examined, only 16 percent were considered successes—completed on time and on budget and fulfilling the original specifications. Nearly a third were canceled outright, and the remainder all went over budget, off schedule, and out-of-spec. Large companies—those with more than $500 million in annual sales—did even worse than the average: Only 9 percent of their IT projects succeeded.

(taken from: http://hbswk.hbs.edu/archive/4137.html )

Would there be a point in trying to come up with ROI numbers if only 16% of projects are even completed on time and on budget (let alone all those being cancelled or missing the target by a lot for one reason or another.)

Measuring a prject by cost and timelines, capabilities anticipated, and technology footprint seems very reasonable and a challenge in itself. Lets hope those managing software projects can do a better job of getting that right.

]]> By: vinnie mirchandani http://andrewmcafee.org/2006/08/still_on_the_case_of_the_it_business_case/comment-page-1/#comment-2531 vinnie mirchandani Thu, 17 Aug 2006 01:42:52 +0000 #comment-2531 Andrew, I think you are repeating what you started with last week. IT is still primitive both on the cost and pay back side. For a smart profession it is mind boggling how poor a job we do with cost estimation too. So yes, by all means be cynical of the payback numbers. To me though I would want to see all sources of potential payback identified in the ROI/IRR/EVA/whatever exercise. Then as costs on an initiative get out of control push at least you have some chance of getting some of that funded from the potential pay back areas. I also developed a framweork of payback areas while at Gartner - I list them in the note below. It is useful in reviewing a potfolio to see how many 9s and 10s show up. That is "too much fat, too little fibre" type spend http://dealarchitect.typepad.com/deal_architect/2006/08/ten_ways_to_jus.html Andrew, I think you are repeating what you started with last week. IT is still primitive both on the cost and pay back side. For a smart profession it is mind boggling how poor a job we do with cost estimation too. So yes, by all means be cynical of the payback numbers. To me though I would want to see all sources of potential payback identified in the ROI/IRR/EVA/whatever exercise. Then as costs on an initiative get out of control push at least you have some chance of getting some of that funded from the potential pay back areas.

I also developed a framweork of payback areas while at Gartner – I list them in the note below. It is useful in reviewing a potfolio to see how many 9s and 10s show up. That is “too much fat, too little fibre” type spend

http://dealarchitect.typepad.com/deal_architect/2006/08/ten_ways_to_jus.html

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