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19 April 2010 | Juan Jimenez Blog
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Captain ITIL and the Fountain of ROI
This week Juan explains why the ROI from ITIL itself is not in the efforts to bring process improvement, but in the strategy used to plan and execute the improvement activities...

Let’s get straight to the point. For years there has been a raging argument over whether or not it is possible to prove ITIL® is a source of Return on Investment (ROI). In the past few months there have been flare-ups of discussions on this very subject on various online discussion forums. Frankly, I am surprised anyone would have any doubt as to the answer to this question. However, I have come to understand that the motivation behind the arguments against “ROI from ITIL” appears to be based on a gross misunderstanding of the logic behind the words, and specifically the meaning of the word “source.”

The majority of the persons stating there is no ROI in ITIL argue this is so because ITIL is not a methodology. As we all know, ITIL cannot be “implemented” because it is a framework. It is descriptive, not prescriptive, and therefore lacks the detail necessary for the traditional interpretation of the activity of “implementation.”

Instead, the proponents of this logic set forth the argument that the ROI comes from the work performed to modify existing IT Service Management processes and functions in an IT organization in order to transform culture and deliver satisfaction to the customers receiving the services in a more consistent, predictable, effective and efficient manner.

At first glance this argument would seem to make sense. However, a simple analysis of the logic of the statement reveals it to be rubbish. Anyone who has invested money and received a return, positive or negative, should be able to immediately recognize why this is so.

What is it that truly delivers an ROI from any investment? It is not the investment itself, of course. If that were the case no one would ever be able to make a living as an investment advisor. In fact, there would be no concept of capitalism, socialism, communism or any other “-ism” because there would be no need to make any decisions in order to achieve ROI. Simply put the money to work and wait for the results!

Is the source of the ROI then the work performed to modify the activities of the IT organization? That is also incorrect. The work represents the investment itself in the process of bringing change to the organization. To state that this is the source of ROI would mean that anything you did to try to modify the way an IT department performs its work would deliver a positive ROI, and we all know that is also not the case. If that were true, there would have been no need for ITIL to be created in the first place, and the concept of good and best practice would not exist.

So what is the correct answer? Think about it. The investment of funds in a stock market, for example, does not in and of itself deliver ROI. The same applies to the actions taken to physically place the money in the market. The mechanism used to buy and sell the stock certificates does not play any part in the delivery of ROI. The true source of ROI in a successful investment is the strategy the investor uses to decide where to put that money in the market.

By the same logic, when the efforts to bring process improvement to an IT organization based on ITIL best practices bear fruit and achieve the satisfaction of the CIO, the organization and its customers. The efforts are the investment. The source of the ROI is ITIL itself – the strategy used to plan and execute the improvement activities! Simple logic then proves that ITIL is and has been a steady and reliable source of ROI for the past 20+ years.

As always, the point of my blogs is to get readers to think, rather than provide ready-made answers, because I will be the first to admit I do not always have them. Feedback on my blog entries is always welcome!

(ITIL® is a Registered Trade Mark of the Office of Government Commerce in the United Kingdom and other countries.)

Juan Jimenez Email to a colleague | Add to MY ITP

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