Controlling information technology costs and reporting ROI in large organizations

Controlling the cost of information technology (IT) and reporting return on investment in such technologies in large organizations has long been problematic because IT is a significant cost center that in most companies does not contribute directly to the generation of revenue. At the same time, the services provided by IT departments directly affect the bottom lines of modern companies and provide valuable efficiencies. Measuring and reporting the effects of those efficiencies has been hampered by two fairly typical shortcomings of IT managers. IT managers whose primary training is in their own discipline tend to view technology issues in terms of meeting a need and often are unfamiliar or unsympathetic to requirements for controlling and reporting costs and return on investment. Yet when classically trained individuals are made into IT managers, they often do not understand the capital and ongoing operational requirements of providing what increasingly are essential services. The present study aims to provide ways of streamlining technology processes and a set of simple formulas that will enable management from any disciplinary background to evaluate the effects of projects, control costs, and accurately report the return on investment of technology projects. These methods should be generalizable throughout large organizations and provide means of streamlining projects and evaluating their outcomes.