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IT Spending, Staffing & Technology Trends: ROI and TCO Trends - 2007/2008 (Chapter 4)

Report Code: CE-4001C Date: 6/2007 By: Computer Economics

The 2009/2010 version of this report is available at this page.


Although some IT investments may be viewed simply as the cost of doing business, business decision-makers ultimately expect a financial return on their investments in information technology. There are two primary measures used to evaluate the economic characteristics of IT investments: return on investment (ROI) and total cost of ownership (TCO). ROI and TCO Trends reports the ROI and TCO characteristics of 21 new technologies and IT initiatives, based on the experiences of survey respondents in implementing and using these technologies.

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Overview Chapter Details Package Descriptions Key Benchmarks Sub-Sector Descriptions Methodology Free Executive Summary

Abstract: ROI and TCO Trends reports the economic experiences of survey respondents with 21 new technologies and IT initiatives:
  • Mainframes
  • Unix
  • Linux
  • Microsoft Windows Server OS
  • Portable PCs (Laptops)
  • Handheld wireless e-mail devices (e.g., Blackberry)
  • Operating system virtualization
  • Storage virtualization
  • Data center consolidation
  • Storage consolidation
  • ERP software
  • CRM software
  • Supply chain software
  • Voice over IP (VoIP)
  • Storage area networks (SANs)
  • Software as a service (SaaS)
  • RFID
  • VAN-based EDI
  • Internet-based EDI
  • Configuration management database (CMDB)
  • Service-oriented architecture (SOA).
Sample graphics from this chapter are shown in Figures 4 and 5 below.

For each technology or IT initiative, this chapter summarizes the ROI and TCO characteristics of that technology.

For ROI, the following are reported:

  • The percentage reporting ROI as positive (benefits exceed the cost of the investment)
  • The percentage reporting ROI as breakeven (benefits match the cost)
  • The percentage reporting ROI as negative (the cost exceeds the benefits)
For TCO, the following are reported:
  • The percentage reporting TCO as less than expected when the investment was budgeted or approved.
  • The percentage reporting TCO as the same as expected.
  • The percentage reporting TCO as greater than expected.
There is a definite link between ROI and TCO. Achieving a positive ROI depends heavily on the TCO remaining within anticipated bounds. If TCO becomes uncontrollable for a technology, the likelihood of a favorable ROI diminishes.

Therefore, it is recommended that the ROI and TCO characteristics in this chapter be viewed in light of the stage of adoption for each technology, as described in Chapter 3, Technology Adoption Trends (CE-4001B). This can give insights into how much the ROI and TCO experiences reported in this chapter are predictive of future economic results. For example, is the technology early in its adoption cycle or has it already been widely implemented? Mature technologies can usually be expected to produce the same results year after year, but emerging technologies are more likely to show improvements in cost-effectiveness after experience is gained in their application. On the other hand, obsolete technologies will grow more costly to operate and maintain as they age.

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