IT ROI: 10 tips for selling (and proving) the value of IT

Jon Fendenheim’s old boss, the CEO of a homebuilding company, liked to equate the cost of each new IT project to sales, as in how many extra homes he’d have to sell to cover the technology’s cost.

Fendenheim, who was director of IT at AV Homes during those exchanges, says his boss’ perspective taught him a good lesson: “It made me cognizant about how I spent the IT money and how to get the best bang for the buck.”

Certainly, most IT chiefs don’t have to equate projects directly with sales figures. But CIOs do need to think about real dollars and actual business impacts if they want to calculate both the costs and, more importantly, anticipated returns of projects they want to undertake.

And it’s a key part of the job today. Data from our annual State of the CIO survey found that 81 percent of IT leaders agree with that CIOs are under extreme pressure to defend their investments and prove ROI.

That pressure is expected to grow, as nearly all business proposals today have a technology component that needs financial evaluation.

Of course, the need to show positive ROI for IT projects is hardly new. Yet management experts say many CIOs still struggle to identify, articulate and quantify returns, especially for iterative projects without clear end dates and for projects expected to deliver soft returns rather than pure profit growth.