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Issue No.04 - July/August (2009 vol.11)
pp: 12-16
Michael McShea , Philips Healthcare
ABSTRACT
IT executives frequently must be able to communicate IT's value in real economic terms, characterizing how technology infrastructure financially benefits the business relative to the company's financial performance objectives. Traditionally, the approach taken has focused on the capital investment process, with return on investment being the primary metric. However, ROI approaches identify financial results pertaining to a specific project, rather than IT programs as a whole, and can be misleading. A new financial metric, return on infrastructure employed (ROIE), has economic and real practical meaning to senior executive management because it recognizes IT as both an asset and a service. ROIE is a new financial management tool with which to judge the business contribution of IT as a whole; using it can motivate management behaviors and disciplines that are essential for success in the modern-day information economy.
INDEX TERMS
IT professional, data center design, ROIE, ROI, infrastructure, ITVM, management, metrics, financial, assets, investment, business
CITATION
Michael McShea, "Return on Infrastructure, the New ROI", IT Professional, vol.11, no. 4, pp. 12-16, July/August 2009, doi:10.1109/MITP.2009.82
REFERENCES
1. R. Bantham, "Supersized ROI: A New Metric Attempts to Provide the Ultimate Context for Technology Investments," CFO.com, 22 June 2005; www.cfo.com/article.cfm/4077483/c_2984407 ?f=archives.
2. M. McShea, "Communicating IT Value in a Modern Business Climate," IT Professional, vol. 9, no. 1, 2007, pp. 42–45.
3. C. Iheagwara et al., "The Different Metrics of ROI: Implications for Information Assurance," Information System Audit and Control Assoc. (ISACA), Nov. 2005; www.isaca-washdc.org/pages/articlesarticle-nov2005-print.htm .
4. M. Harris et al., The Business Value of IT, Managing Risks, Optimizing Performance and Measuring Results, CRC Press, 2008, pp. 18–19.
5. J. Lopez, Return on Enterprise Architecture: Measure IT in Asset Productivity, Gartner Group Research Report, July 2002.
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