Orders of Magnitude

Many an IT project has been signed off on the back of what could be described as less than realistic expectations of return.  I am not suprised to read again again that IT returns are often orders of magnitude out, my concern is that in today's climate CIO's will be faced with stiffer and stiffer competition for access to capitial.  McKinsey point this out in their article Five trends that will shape business technology in 2009 in which they state a retail example where a CFO would know with some degree of precision what the return on an additional location would be, but possibly not on the more risky IT project - ask yourself the question "which would you choose?"

Clearly here in 2009 there is a challenge to calculate, estimate and articulate value from IT investments as accurately as possible.  There may be little tolerance at the end of the year for IT projects that fail to deliver their numbers, given that often IT projects represent some 30% of a company's descretional capital spend.  Expect a tougher and more rigourous process of approval from CFO's who are desperately trying to reclaim and keep any cash they can given the increasing challenge to raise money from the markets.  The latest bit of kit is unlikely to get the green light but IT projects that support the business in these testing times, manouvre, manage or launch new products and services may gain a more positive audience.