Business units inherit IT cost-justification duties

One of the more controversial predictions made by Gartner Inc. analysts at the consulting firm's Symposium/ITxpo 2002 conference this week is the notion that business units will eventually become responsible for proving the potential value of IT investments.

But before IT managers crack open the champagne, a word of warning: technology professionals whose companies have already put the onus of justifying projects on business managers say the transition doesn't come without pain.

"There was a lot of pushback on this from the business side because they didn't want ownership of that," said David Dart, managing director and CIO at New York-based HVB America Inc., referring to IT cost-justification requirements. HVB America is a division of HVB Group, a Munich-based banking and financial services firm.

Dart and his boss, HVB America's chief operating officer, pushed the bank's business units to take responsibility for calculating potential returns on IT investments two years ago. Despite the initial resistance, Dart said HVB America has succeeded in its transition. One key step was requiring business managers to make their cases for IT investments to peers who sit on a management board, he added.

Columbus, Ohio-based Bank One Corp. began requiring its business units to prove the value of IT investments last year, said Nancy Toms, a technology program director in the company's Chicago office. As part of the change, Toms said, she and her IT counterparts have been prodding business managers "to begin including IT projects within their own budgets," including the anticipated ROI.

However, Toms said she has run into problems similar to the ones encountered by Dart. For example, Bank One's IT staffers frequently have to go back to business units after a technology project has been pitched to ask for ROI data. But now that the effort is nearly a year old, said Toms, "we're starting to see some acceptance and understanding that this is the way things are."

A business manager at a New England-based insurance company said she also thinks that business units should take charge of proving ROI -- but for altogether different reasons. "IT professionals at our company aren't good at making these kinds of calculations," said the manager, who asked not to be identified.

But because ROI calculations have predominantly been put in the hands of IT departments until now, some attendees at the Gartner conference said they question whether business units will be receptive to taking on that responsibility.

"Business should take responsibility for demonstrating the value of IT, but I'm expecting that there will be some political battles," said Paulette Thompson-Heron, director of IT at Lippincott Williams & Wilkins, a Baltimore-based publisher of information for medical professionals.

Mary Knapp, an executive assistant to the chief technology officer at DaimlerChrysler Corp. in Auburn Hills, Mich., said the automaker has been increasing its efforts to align IT operations with its business units, including requiring the business side "to take more responsibility for cost-justifying IT investments." Still, Knapp said she's not sure whether the business units at the company "will ever take complete control of that responsibility."

"I think it's natural that business units will take on responsibility for demonstrating the value of IT investments, but I don't expect this to evolve for at least four or five years," said David Du Croix, an IT manager at Tu Delft University in Tu Delft, Holland.

But given how business unit leaders are becoming increasingly IT-savvy and engaged in driving technology projects, it's only natural that they take on the responsibility for demonstrating the value that IT investments could yield, said Gartner analyst Barbara Gomolski. "He who pays becomes accountable," she added.

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