Proof/Notes

Answers to the questions "How much value does our IT department produce?" and "What is the return on my IT investments (ROI)?" will likely vary, depending on perspective. While IT management may answer the question "a lot," top management may take a different view. Answers such as "not enough," and "what ROI?" and "IT is a necessary evil" are far more typical from corporate management. In fact, the truth is probably closer to the IT view. However, the lack of agreement on the answers identifies a gap in perception that the IT manager must overcome in order to succeed.
If one defines "value" as the cumulative increase in direct benefits, indirect benefits or flexibility increases, and risk reduction, we estimate the typical IT organization delivers an ROI, or incremental increase in value, of between 15 percent and 40 percent. However, most IT organizations do not even have clear ways to calculate and communicate the direct benefits produced. Though these estimates are obviously not predictive, nor are they specific to any type of organization, the process by which we calculate this return can provide a framework an individual organization can use to better quantify and communicate the value of IT and begin to bridge the perception gap.