ROI best metric in measuring IT’s value
And return on investment is certainly the better metric when compared to measuring IT value by the dollar amount saved on resources. After all, what is more important: the cost of the project? Or the ultimate value (as measured by ROI) of the project?
The best talent doesn’t usually come cheap. The best, most successful projects are not usually completed by low-cost, inexperienced IT drones.
If a company is not getting a good return on investment (ROI) from technology, perhaps all the money saved through purchasing the cheapest IT resouces is actually a huge opportunity cost.
For example, what if CSX Corp had not chosen to implement its wireless dispatch system? Sure, they would have saved $400,000, but the cost of not doing the project would have been in the millions. A cost that would repeat itself every year until it converts to a missed opportunity as a competitor eventually gets it done.
JULY 11, 2005 (COMPUTERWORLD) - One year after spending $400,000 on a wireless project designed to speed up communications with 450 independent truck drivers and cut costs, CSX Corp. reported last week that it may have hit a bonanza.
Jacksonville, Fla.-based CSX said the wireless notification application from Air2Web Inc. in Atlanta has cut the number of phone calls truckers make to the CSX Intermodal call center from 20,000 a week to 11,000, said John Dugan, technical director for intermodal applications at CSX Technology Inc.
And because drivers can now send short text messages and e-mail via Research In Motion Ltd. BlackBerry devices, they each save about an hour per day that they once spent waiting for a dispatcher, Dugan said. That alone improved driver productivity by 400 hours per day — a major reason why driver turnover dropped from 80% to 50% in the past year, he said.
Holding off on investment in IT projects are likely costing corporations far more money than they may be saving by not doing innovative new projects. Failed projects cost even more.
The good news is–as illustrated b the CSX project– that other trucking companies who utilize independant operaters will have to come up with some ways to accumulate a corresponding amount of value into their products in order to stay competivie with CSX.
One company’s innovation is the rest of the market’s inspiration. The lesson being: Keep up with technology advance, of die on the vine.