Article

New tool aims to make ROI calculation easier

Matt Hines, News Writer

Alinean LLC, a maker of IT spending methodology tools, is releasing software today that it says will dramatically improve the manner in which businesses predict and measure return on investment (ROI).

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Dubbed ValueIT, the new software is meant to replace more simplistic methods of calculating IT spending and project impact. Year-old Alinean, based in Orlando, Fla., is led by President and CEO Tom Pisello, a former industry analyst at research firm Gartner Inc. Pisello said the tool will give CIOs and high-level project managers a greater ability to select the right products. It will also help guide business managers in justifying expenses, he said.

According to Pisello, ValueIT revolves around analysis of key performance indicators such as net benefits, ROI, internal rate of return and expected payback period. The tool also predicts other factors about specific projects, such as projected level of investment, outlay, risks compared with returns, and strategic impact.

"In this environment, business managers are over-focused on cost-cutting, and the tool helps defend necessary investments," Pisello said. "It communicates group projects into various subcategories and allows organizations to pick and choose where they want to put dollars."

ValueIT comes from Alinean preloaded with templates for various IT projects, including server consolidation, storage consolidation, security, managed services and enterprise resource planning (ERP). Users will also have the ability to create their own templates. Another facet of ValueIT is its capability to allow users to roll up IT projects into an overview of organization-wide spending. Pisello said the software will even give companies the ability to compare their own IT investments with those of their competitors.

At least one analyst is sold on the prospects of the product. David Alschuler, senior vice president at Aberdeen, a Boston-based research firm, predicts that companies will continue to invest in tools such as Alinean's to help justify and give credibility to IT budgets. He said that while ValueIT may not yet be perfect, it is the most advanced ROI calculator he has seen thus far.

"[ValueIT] solves a problem that people have been confronting in a different way than traditional OLAP [online analytical processing] decision support analysis tools," Alschuler said.

Alschuler said ROI calculation tools are becoming a must-have for many companies, particularly in the enterprise space. He added that purchase decisions made at the CIO level cascade down in terms of operational support to lower level individuals, and that use of a tool like ValueIT creates a consistent framework for building a plan.

"It's a much better alternative to having multiple project managers evaluate their own efforts in different ways," he said. "It lends a consistent modeling framework with which to structure any spending analysis."

Pricing for the tool is based on the number of users seats within an organization but Alinean released ballpark figures of $20,000 for small businesses, $50,000 for mid-sized companies and $100,000 for enterprises.

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