Regulatory Compliance Putting ROI on Back Burner

The sun rises in the east, water flows downhill and strategic technology initiatives must show a positive return-on-investment (ROI). Well, two out of three isn’t bad.

The need for strong Rios has long been a constant for CIOs. However, some CIOs and other industry experts are saying that emphasis is softening.

“ROI is a significant factor but, to me, the key point is linking an IT project to a valid business strategy,” said Jay DeNovo, CIO of Home Savings Bank in Madison, WI. “ROI as a measuring tool becomes less important because it’s the validity of the business strategy that you have to evaluate. Our metrics are provided by our government regulators and the strategic IT roadmap has to reflect that.”

While DeNovo is CIO of a small organization, technology executives in larger enterprises are saying similar things. The reasons for this are simple: Large projects to insure security, disaster recovery and regulatory compliance are taking an increasing share of the resources available to technology executives. And those types of projects have no ROI.

“Now, there are all kinds of issues to deal with where there is no ROI,” said Tom Pyra, COO and CIO for Clark Consulting, an executive benefits and compensation consultancy. “You either do it or you’re in trouble.”

In other words, the bottom line isn’t always the bottom line anymore for many IT projects. And that is changing the nature of a CIO’s job.

“It’s definitely made the job more stressful and not everything you do is value-added any more,” Pyra said. “We’re dealing much more with projects that are value-preserving. And sometimes it’s a black-and-white test: You either have it or you don’t. If you don’t, you can be fined.”