Like other great inventions–money, twelve-bar blues, baseball–it’s crucial to make “return on investment” (ROI) work for you, rather than the other way round.
That principle applies quite concretely in the datacenter or in information technology (IT) operations. Dysfunctional organizations equate ROI with “cost savings”, and often a distorted form of cost savings that corresponds to departmental boundaries. These distortions sometimes extend to massive scale; Tom Nolle criticizes IBM, network vendors, and others for being “stuck in the cost-reduction stupids” in his incisive occasional blog for CIMI Corporation. For him, this is “… the Death of Strategic Thinking.”
The same misuse of ROI applies at much smaller granularity: when you manage your team purely as a cost center, and define success as the extent to which you drive inputs to zero, you’ve established a low ceiling for the value you contribute. There’s a tactical place for thrift, of course, just as there is for carefully engineered commoditization.
How do you balance efficiency concerns, though, with true strategic growth, that is, with expansion of opportunities? That balance is where to look for the real meaning of ROI.
Engineering and economics share a fundamental focus on decisions between alternatives: do we keep our existing storage for another year, or shift from still-usable equipment to replacements that will run cooler, cheaper, and faster? Do we lease facilities in a colo for build-out we’ll need by summer, or buy as-we-go in the cloud? ROI’s contribution is to compare alternatives in a systematic way, and help decide between them; don’t fall into the trap of reducing all of ROI to cost savings.
To make ROI work for you, you need to be technically capable at its calculations, and you also need to connect to your audience. Part of the excitement of Application Performance Management (APM) projects is that they combine incontestable accounting wins–so many sales conversions gained from so much swifter average response–with strategic advances. Elad Katav, Chief Operating Officer of Correlsense, recently mentioned to me that people don’t compute ROIs for eyeglasses (although they could): they recognize they need to see the world with clarity, and that corrected optics are “game changers”. Good APM is very much like eye glasses. It fundamentally changes what IT sees, and how it relates to customers. That’s a return on investment, but at an entirely different level than conventional ROI thinking.