A summary of Liebmann, L. (1998). Managing IT investment: Less isn't always more. Business Communications Review.

1. By Lenny Liebmann Managing IT Investment: Less Isn’t Always More

2. ROI is More Important A high total cost of ownership (TCO) isn’t necessarily bad when it comes to technology spending. Reasons why return on investment (ROI) is even more important.

3. Total Cost of Ownership Implementation Management Operation Costs

4. Business Interests Related to IT Not just about reducing expenditures But also about increasing… Growth Innovation Return-on-capital

5. Value vs. Investment Reductions in total cost of ownership do not translate to increased return-on-investment. Inexpensive may be ineffective. Aggressive investment can produce ROI.

6. TCO Figure Not Industry-Wide Calculating an industry-wide TCO figure for any particular class of resource is problematic and probably pointless. Variations in configuration, utilization, scale, leading vs. trailing, IT staffing, regional and industry salary rates and other parameters vary.

7. Ratio of Two Metrics SC/RPE - Seat Cost over Revenue per Employee Intelligent Cost Metric Pertinent to company differences RPE is a useful metric for classifying companies. IT and line-of-business managers speak in terms of per-employee stats hence SC or Seat Cost.

8. Bringing ROI into the Equation Lowering the ownership costs TCO does not necessarily mean increased return on investment ROI.

9. SC/RPE and ROI Proportionally higher ownership costs could yield higher ROI. Business alignment, not raw costs, should be of primary concern to dollar-conscious IT managers.

10. Conclusion SC/RPE allows us to compare cost of ownership among dissimilar enterprises. Cost of ownership does not necessarily bear on ROI.

11. References Liebmann, L. (1998). Managing IT investment: Less isn't always more. Business Communications Review, 28(11), 52. Retrieved from EBSCOhost.