Most for-profit organizations are composed of two primary functional categories – profit centers and cost centers. A profit center is a department that creates its value for those outside the organization. In other words, profit centers generate revenue for the organization. The profit center’s objective is to produce products and services that are consumed by its customers.

The rest of the organization is aptly considered “overhead” – a cost to the organization. This does not suggest that overhead areas do not create value. Rather, the value that is created by these departments is absorbed and used internally within the organization. Therefore, the benefits provided by support areas are more difficult to ascertain because the returns do not appear on the income statement as a dollar amount.

Corporate support has a varied definition between organizations. Common functions include: Information Technology, Human Resources, Legal, Internal Audit and Finance.  Much has been written about measuring return on investment for these support functions. Yet, corporate support functions have only begun to attempt to measure return on investment in recent years. Return on investment is much more straightforward when there is a direct relationship between project execution and increased revenue. Before return on investment can be realized the ability to build awareness, define an identity and increase demand must be developed.

Corporate Support Challenges

For a cost center, capturing expenses are a much simpler task than attempting to quantify the financial benefit. As a general rule, revenue associated with the migration to a new email platform is not directly found in the income statement. Cost and operational efficiencies are gained with more updated technology, although few lines of business are willing to sign-up for additional revenue gain by having a faster or the latest email platform version. In an operating environment whose priorities are revenue gains or expense efficiencies this tends to lead to minimal overhead related business cases receiving approval for funding.  There certainly is cost avoidance associated with an infrastructure upgrade. Still, justifying an expenditure that enhances overhead and creates internal value is a major challenge.