Thomas Hoffman

CIOs often have trouble communicating to senior management the value IT investments can deliver to their organizations. After an upgrade to his company's global network infrastructure last year, Baxter International Inc. CIO John Moon decided to take matters into his own hands -- literally.

As IT managers consider which technologies to invest in this year, they should exercise caution with customer relationship management (CRM) projects but expect high returns on investments in business intelligence software.

What we have here is a failure to communicate. According to a soon-to-be released survey of 277 CIOs and IT directors, nearly three-quarters of the respondents said they have had to cut their budgets by more than 15 percent over the past two years and that they think more effective communication with senior management about the value IT generates could have reduced those cutbacks by half.

Many IT managers are keen on the notion of setting up a portfolio management approach to help gauge the value of technology investments. But those who try to do so often run into start-up problems, such as trouble getting buy-in from business units, according to attendees at a Meta Group Inc. conference held recently in San Diego.

Online learning and e-business integration projects are delivering the strongest returns on investment (ROI) for companies, while customer relationship management (CRM), content management and online marketplace efforts are at the bottom of the list.

DaimlerChrysler AG is in the early stages of automating the way its manufacturing plants are designed, a project that will require an eight- to nine-figure investment and is aimed at reducing the company's new-vehicle production cycles by up to 30 per cent.

As many as 35 per cent to 45 per cent of U.S. and Canadian IT workers will find themselves replaced by contractors, consultants, offshore technicians and part-time workers by 2005, according to a report issued this week by New Canaan, Conn.-based Foote Partners LLC.

As IT managers struggle to wring all the value they can from their technology investments, the concept of treating an organization's IT assets like stock market investments with a buy/hold/sell approach is beginning to gain momentum.