Time for ROTI

Companies spend trillions of dollars on technology each year (more than $3.5 Trillion by analyst estimates). Depending on the industry, CIO spends range from 1% to 5% of revenue, higher in industries like financial services and lower in sectors like manufacturing & resources. If you include technology spend outside the CIO organization, this number is likely to be much higher. The business groups are investing in big data, data visualization, analytics, niche cloud applications, BPM and more at a furious pace. Disruptive technologies are emerging every day and companies are more eager than ever to bring them into their environment to deliver transformation they promise.

However, in dozens of conversations I have with clients across industries, I see that the leverage of technology has not kept pace with their potential business value across industries. This challenge of value left on the table is a recurring one and represents a significant competitive risk for organizations.

Let us understand some key reasons. 

• First, technology’s power is a lot of more transformative today – it is more core to business or it is the business. Imagine your competitor leveraging its data investments to create cross-sell/up-sell opportunities for their sales team in a near real-time manner, while your company despite having made all the investments is not as sophisticated at it. You don’t want to be there!
• Second, technology purchase and consumption is ‘democratized’ – almost every function is making investments in technology. While this brings more transformative power to business groups, the governance on value realized from technology investments is often not consistently high
• Third, technology spend as a percentage of revenues is a lot higher now than even 5 years ago and it will continue growing. In an environment where companies are making big investments even to maintain status quo, no company can afford to not assess the return from an important and growing spend

The concept of building business case for IT initiatives is not a new one, however, in this era of burgeoning technology spends and its democratized purchase & consumption, it needs a methodical and ongoing assessment at an both an organization level and at an individual business group level.  

It is time when both organizations and business groups begin to critically and consistently assess their Return on Technology Investment (ROTI).  I don’t believe the day is far when a company’s annual report will talk about the leverage from this highly transformative investment. What was your ROTI in 2015?

These are my initial thoughts on ROTI, more soon about challenges of measuring, reporting, adoption & accountability.