US-based Alinean recently shipped ValueIT, a "return on investment" tool kit. The software lets CIOs evaluate IT projects based on risk and potential return and set benchmarks to evaluate pending projects.
Not to be outdone, research company Gartner got into the act earlier this month with software that measures ROI, and uses what Gartner calls "a Swiss Army knife of methodology tools" to forecast the success of IT projects.
Companies like Alinean, its rival CIOView and Gartner are aiming their software at CIOs because the IT chiefs often have to demonstrate the potential for quick returns on technology investments in order to get CEOs and chief financial officers to sign off.
Such scrutiny, which was far more relaxed during the tech boom of 1999 and 2000, has put a crimp in tech spending.
"CEOs are even looking at tech deals under US$100,000 to save money," said Tom Pisello, president and CEO of Alinean. "CIOs need tools to do the due diligence and pick the best projects for a flat budget."
ROI software is largely a product of the tech recession. When times were good, companies were spending on technology without doubting the investment, said analysts.
But with the economy in the doldrums, CIOs have to justify any project by balancing expenses, maintenance and revenue growth. "IT spending has largely become discretionary spending," said Bruce Tempkin, a Forrester analyst.
"IT spending usually is a percentage of a company's revenue or earnings, and now any investment has to produce economic results." With companies looking for an independent check on IT decisions, ROI software could find its niche.
The software is designed to be part of a larger budgeting process that may include outside consultants and services companies. By running potential projects through the software, CIOs can begin speaking the same language as CEOs and CFOs.
"I think this type of software is important," said CIOView customer Joseph Brennan, director of IT for Neose Technologies, a biotechnology company. "It helps technical people without financial backgrounds put IT projects in terms that the purse string holders can understand."
ROI software in general is designed to appeal to three sets of potential buyers: CIOs, software vendors--which can use ROI data to pitch customers--and services companies that need to help clients make decisions.
Will the software ultimately replace tech consultants? Probably not. CIOView was a part of consultancy IDC until four years ago and still counts IDC as a minority shareholder.
And a representative of Forrester Research said the company doesn't consider the ROI software upstarts to be competition because Forrester provides more detailed services and one-on-one attention.
Meanwhile, Gartner considers its ROI software complementary to the other services it offers, said Audrey Apfel, a Gartner vice president and research fellow.
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