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To Quantify or Qualify

By Larry Dignan  |  Posted 2003-04-01 Print this article Print

Not every project is all about hard numbers. The trick is not to overdo the soft benefits and to mix in concrete figures.

In sports, the "intangibles" that certain athletes possess carry a lot of weight. Leadership and a good presence in the locker room are two oft-cited intangible assets.

Technology executives, however, can't use sports clichés to justify a project. If a manager can't provide a few return-on-investment (ROI) figures, there's a good chance a chief financial officer will shoot down the project.

Analysts acknowledge that there are benefits to technology projects that do require a qualitative approach. The trick is not to overdo the soft benefits and to mix in concrete figures.

"We don't try to measure what's immeasurable," says Dale Troppito, a managing partner of the Gantry Group consulting firm. "You have to use both qualitative and quantitative analysis."

For instance, Troppito notes customer satisfaction is largely an intangible effect that may not be measurable. But increased sales or anything that cuts costs is quantitative—and therefore calls for an ROI calculation.

Tom Pisello, CEO of Alinean, an Orlando, Fla.-based ROI software developer, says technology executives need to classify projects based on how far the benefits lean toward the qualitative. Depending on the project, the benefits could be as much as 40% intangible.

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"A 60%-40% mix of quantitative benefits to qualitative is about as low as I'd go," says Pisello. "I think a lot can be quantified."

But qualitative benefits still matter, he says. The key is finding the right balance. "You can't use intangibles as an excuse if your team doesn't have the time to put effort into making a business case," Pisello says.

Business Editor
Larry formerly served as the East Coast news editor and Finance Editor at CNET News.com. Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.
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