Decisions about how to use ROI analysis depend on understanding the nature of the methods themselves and how they relate to the business setting. ROI analysis in general is a rather diverse collection of methods, skills, tools, activities, and ideas. They all may be useful for assessing the relative value over time of some investment. These methods are not, however, a single formula or predetermined calculation that will yield a simple yes-or-no answer to the question of how to invest. ROI is not a silver bullet. Actually designing and carrying out any kind of ROI analysis requires making many choices among the ideas and methods available and conducting an analysis appropriate to the decision situation. Different choices will produce different results.

Consequently, a meaningful analysis of returns on investment in information technology is far easier said than done. Choices about how to conduct an ROI analysis should be based on critical understandings about:

• the strategic objective(s) of the analysis,
• the place of the proposed IT investment in the overall enterprise³,
• exactly how the analysis should be done (i.e., what data and methods of analysis are best suited to those objectives), and
• how the ROI analysis fits in the overall decision context for IT investments.

This guide will introduce you to these four basic understandings and provide resources for deeper investigation of each.