Author: IT isn't like construction, and ROI doesn't work for IT

Michael Gentle -- a former Computerworld columnist -- has a new book out titled, "IT Success! Towards a new model for information technology," and it's full of provocative ideas.

First, the construction analogy. Gentle says:

"The fundamental error of reasoning in the traditional IT business model is to assume software can be conceived upfront like a house, and subsequently scoped, spec'd and signed off for commitment by both client and vendor -- and that the documented business benefits will start flowing once the solution has been delivered."

Gentle says nothing could be farther from the truth. IT projects are full of risks from the get-go. The business is constantly moving, so user requirements are constantly changing and can't be cast in stone at the outset. IT systems have to be continually reworked. And there's no guarantee the expected benefits will happen.

The construction industry, he says, works with standard products and components, standard categories of labor and standard costs. In IT, those things are anything but standard.

Gentle also takes on the whole ROI movement. He says that "software investments are not the same as physical investments like plant, property and equipment, which can be analyzed in isolation for ROI." IT systems aren't standalone things; "they are integrated parts of an enterprise whole, linking in one way or another the demand and supply chains, from marketing and sales through order management and customer service." The benefits are multi-faceted, too. And that all makes ROI for IT so extremely difficult to calculate.

Gentle goes further, saying that IT investments shouldn't have to go head-to-head with other business investments in the competition for funding. Because they're just different!

"From a purely financial perspective, an IT project is arguably one of the worst investments you could make," Gentle says. As IT investment manager John Spanenberg at ING Bank put it:

"In terms of gambling, first there is horse racing, then there is poker, and then comes software development."

Gentle writes approvingly of author/consultant Harwell Thrasher's views on ROI (from a Computerworld interview here). Thrasher says a high-ROI project could actually make a company more rigid, not more flexible. And people who write ROI proposals tend to overstate the return, understate the costs, and neglect risk. Thrasher put it this way:

"[T]he project with the highest ROI on paper tends to be the one with the most creative proposal writer."

------------
Related:
CRM: Get Sales Chiefs on Your Side, by Michael Gentle
CRM: Ready or Not?, by Michael Gentle
IT benefits too intangible to measure? Balderdash!