Comments on: Using ROI As A Constraint, Not An End In Itself http://lostechies.com/derickbailey/2010/02/06/using-roi-as-a-constraint-not-an-end-in-itself/ Better Than Yesterday Fri, 24 May 2013 06:39:00 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: Steve http://lostechies.com/derickbailey/2010/02/06/using-roi-as-a-constraint-not-an-end-in-itself/#comment-561 Steve Mon, 08 Feb 2010 19:18:33 +0000 /blogs/derickbailey/archive/2010/02/06/using-roi-as-a-constraint-not-an-end-in-itself.aspx#comment-561 ROI isn't really the issue here, perceived ROI is. Also, many IT departments are viewed as nothing but a cost within the executive branch which also cause no ends of trouble. For example, if a nightly process breaks say once a week, and some IT guy who's on call gets up at 3am and somehow fixes the problem, that has no cost to the business (at least no perceived cost). So the next day when the IT guy who fixed the problem asks for some time to fix it he can't prove ROI since fixing the problem is "free". So when it comes time for the IT Manager/Director/Whatever to go hat-in-hand to the Executives to say "Hey, we've been doing nothing but delivering new features for two straight years, I really could use a couple of months to stabalize certain things." he gets shot down because hey, that IT guy getting up at 3am is free. ROI isn’t really the issue here, perceived ROI is. Also, many IT departments are viewed as nothing but a cost within the executive branch which also cause no ends of trouble.

For example, if a nightly process breaks say once a week, and some IT guy who’s on call gets up at 3am and somehow fixes the problem, that has no cost to the business (at least no perceived cost). So the next day when the IT guy who fixed the problem asks for some time to fix it he can’t prove ROI since fixing the problem is “free”.

So when it comes time for the IT Manager/Director/Whatever to go hat-in-hand to the Executives to say “Hey, we’ve been doing nothing but delivering new features for two straight years, I really could use a couple of months to stabalize certain things.” he gets shot down because hey, that IT guy getting up at 3am is free.

]]> By: Kyle Baley http://lostechies.com/derickbailey/2010/02/06/using-roi-as-a-constraint-not-an-end-in-itself/#comment-560 Kyle Baley Sat, 06 Feb 2010 21:51:01 +0000 /blogs/derickbailey/archive/2010/02/06/using-roi-as-a-constraint-not-an-end-in-itself.aspx#comment-560 I help out on an economics course each year and the instructor likes to drive home a similar point. ROI by itself isn't a good metric. Take two scenarios: invest $1 today and get $2 next year or invest $1million today and get $1.5million next year. The ROI on the first is much better but few people would take it over the second. You also have to consider the net present value. I help out on an economics course each year and the instructor likes to drive home a similar point. ROI by itself isn’t a good metric. Take two scenarios: invest $1 today and get $2 next year or invest $1million today and get $1.5million next year. The ROI on the first is much better but few people would take it over the second. You also have to consider the net present value.

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