Return on investment (ROI) metrics drove more IT project decisions in the past year than did total cost of ownership (TCO). Which metric is used more often signals how the IT department is viewed inside your company. Devising ways to show the value of corporate technology has occupied CIOs for about as long as the 25-odd years the profession has existed. While measures such as internal rate of return and economic value added are applied with mixed success, ROI and TCO remain stalwarts.
An ROI calculation quantifies both the costs and the expected benefits of a specific project over a specific time frame, usually three to five years. TCO, on the other hand, includes just costs.
Source: CIO, http://cio.com