Projects That Defy ROI: Page 2 of 5

• Technology ROI: The   Siemens Formula

There's no shame in resorting to qualitative arguments now and then, says William Ellison, vice president of information systems at Medical Consultants Network, a 100-employee company based in Seattle that performs medical exams for insurance companies. When Ellison joined Medical Consultants, executives were frustrated because each of the company's 13 regional offices kept a separate database to track patients. They couldn't see what the satellite offices were doing.

Ellison couldn't express in dollars the potential benefits of database consolidation--what is the benefit of management being able to run a report on where the company stands?--but his instincts told him it was the way to go. After the fact, Ellison is confident that Medical Consultants has recouped the seven-figure expense. Several new clients wouldn't have become clients were it not for his company's ability to demonstrate that it could track patients centrally, he says.

ROI analyses get especially fuzzy on security, disaster recovery and other IT projects that, in effect, require proponents to "prove a negative," says Phil Mogavero, CEO of Data Systems Worldwide, a systems integrator and outsourcer. If your network never gets broken into, you don't know for sure that you prevented an intrusion. It explains why companies tend to become interested in intrusion detection only after their systems are compromised, Mogavero says.

It's also dangerous to think that new revenue can justify an IT project. Even after the project goes live, the results may not be measurable.

Exterior Wood, a 125-employee lumber producer in Washougal, Wash., invested about $17,000 and 100 labor hours in a warehouse-automation system that generates labels for wrapped shipments so customers can determine package contents without opening them. The system gets its information from a wirelessly buyers IBM AS/400.