The usual way managers assess the value of an IT initiative is through ROI. It has become the standard metric for picking one IT project over another or for determining the success of an IT effort. ROI has become so pervasive in determining IT value that I have put my daughters through college, in large part, by doing ROI analyses for technology vendors; see my Ultimate ROI Guide.

ROI certainly works for stand-alone IT projects. The approach, however, does not work particularly well for long-duration, ongoing IT efforts that may serve multiple uses and span decades, suggests Miko Matsumura, chief strategist at Software AG.

Matsumura calls his preferred approach “return on assets” (ROA). This is not exactly your accountant’s ROA. It is more like a determination, partly metaphorical, of determining the lifetime value delivered by an IT investment.

The problem arises when an IT investment spans years, even decades. Software AG, for example, sells a basic enterprise database and has customers who have used that database in numerous ways for over 30 years. This goes way beyond what the typical ROI analysis, which usually amounts to little more than a straight-line payback, can address.

ROI works for the short-term, project-oriented, fast-payback thinking that characterizes management today, especially recession-obsessed managers. These are the ones insisting on a positive payback in less than 90 days or they won’t approve the IT project. (Watch for an upcoming wiredFINANCE piece in which I describe how IT vendors can skew a customer’s ROI analysis to show whatever ROI, no matter how ridiculous, the manager insists on.)

The kind of ROA Matsumura has in mind looks across multiple IT platforms, geographies, business units, projects, and teams. In such cases, the underlying piece of technology must be treated not as a discrete product but as a service that entails ongoing costs yet also delivers ongoing returns in numerous ways. Such an ROA analysis must consider the technology’s durability and scope.

In a recent blog, Gartner analyst Daryl Plummer wrote a piece titled “IBM Couldn’t Care Less About Being Cool. But Should We?” The gist of his message: IBM, in its plodding way, is doing a lot of nifty things it isn’t really getting public credit for but should. The IBM mainframe, now designated System z, still is compared by some pundits to a dinosaur marching off to extinction. To the contrary, IBM has taught the System z to do the sexy stuff—SOA, cloud computing, Linux, Web 2.0, mobility—that is so in vogue today. (For more on this, see my blog, dancingdinosaur.) That’s far from extinction.

Similarly, the ROA Matsumura describes definitely is not cool. Yet there is ongoing value that should be recognized in the kind of IT he identifies. I leave it to wiredFINANCE’s more financially savvy readers to figure out an acceptable way to quantify it for the accountants. ###