Decision-making in IT investment

Today's mission of IT says "Bring value". The business demand on IT is growing pushing CIOs to make new steps to align their operations with the business needs and be capable of satisfying the demand. "Run like a Business" has become a common mantra for many of today's IT organizations. What does it mean to "Run like a Business"? A business knows what it delivers to a customer, knows what they charge and what it costs, the difference being profit. IT Service Management is a strategic approach to managing IT application services, the business product of an IT organization, from a process perspective. However, IT is no longer about technology only, management is facing the challenge to include IT in their complete operations portfolio. It means that the same rules and policies applied to other departments shall be applicable to IT as well. That includes the financial justification and budget usage. IT investments go through the same evaluation process as any other investment decisions taken out on the top level of management. This paper discusses modern financial methods of measuring effectiveness of IT projects and focuses on ROI - a widely used measure in real business contracts.