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Consulting firm targets tools at ROI analysis

Automated ROI analysis software set to ship in September will offer help to IT managers in justifying the cost of technology investments to senior management within their companies.

ValueIT, a Windows-based tool kit developed by consulting firm Alinean, is effectively three IT budgeting tools in one. The software, which will cost roughly $20,000 (£12,792) per seat, is designed to calculate the return on investment of proposed projects, determine which ones offer the most financial value and compare a company's IT spending against a database of information from about 4,000 US companies.

The tools are designed to assess how IT spending relates to the overall financial performance of a company, but Alinean chief executive Tom Pisello said they also include a list of about 150 "intangible benefits" that IT managers can plug into their ROI calculations, such as customer retention rates.

"The vast majority of CIOs I know are not familiar with the current calculation techniques that a CFO is going to be looking for in project justification," said Garrett Grainger, CIO at Dixon Ticonderoga. "This tool should give [CIOs] opportunities to do that."

Dixon Ticonderoga, which makes writing instruments and art supplies, is preparing to install a manufacturing resource planning application developed by JD Edwards. Grainger said he hopes to use ValueIT to measure how the software affects employee productivity and drives other efficiency gains.

"This product is going to see some pretty decent acceptance in the market, tight budgets notwithstanding," Carey Azzara, an analyst at Hurwitz Group, said. Other ROI analysis tools on the market now have mostly been written by IT consultants and are "usually patchwork and customised to whatever the problem is the client brings to the consultant," he said.

But Azzara added that Alinean will have to come up with more flexible pricing for large companies with many potential users. "Do the multiplication, and it starts getting pretty expensive," he said, referring to the $20,000-per-user cost.

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