SmartAdvice: Getting The Business Case Right For IT Portfolio Planning - InformationWeek

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10/27/2005
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SmartAdvice: Getting The Business Case Right For IT Portfolio Planning

Check out the seven C's for payback on portfolio planning, The Advisory Council says. Also, wireless upgrades could be the next "killer app" when a standard emerges.

Editor's Note: Welcome to SmartAdvice, a weekly column by The Advisory Council (TAC), an advisory service firm. The feature answers two questions of core interest to you, ranging from leadership advice to enterprise strategies to how to deal with vendors. Submit questions directly to [email protected]

Question A: What are some commonly overlooked critical success factors for effective IT portfolio planning, also known as ITPP?

Our advice: Boost portfolio planning success by addressing two commonly overlooked critical success factors: (1) getting the true business value of each ITPP project "right", and (2) overcoming management anxiety that ITPP smothers their highly prized "business judgment".

Getting each project's business value "right"
The entire IT-investment decision process is no better than the accuracy of the ROI business value assigned to each project. TAC estimates that more than half of all business cases used in ITPP contain significant errors that can skew ITPP decisions in the wrong direction. The three most common business-case weaknesses to watch out for are a) over/understated value (caused by invalid metrics, faulty cause-and-effect logic, and credibility-light calculations), b) missing value (due to failure to look in the right places and ask the right questions), and c) mishandling of intangible payoffs (caused by a false belief that intangibles don't influence project decisions). Remedies are threefold:

The Seven Cs
Determine where the problems lie: To easily identify if business-case shortcomings are significant, assess a cross-section of existing business cases for the "Seven Cs":

  • Correct fit (nature and boundaries of analysis are clear)
  • Concerns (who cares about what)
  • Completeness (every important cost and benefit area assessed)
  • Connections (key features linked to business goals)
  • Credibility (analysis is convincing)
  • Conciseness (message is succinct)
  • Compelling (key messages conveyed by intriguing stories)
  • Locate where hidden value lies: See "20 Ways To Find Tangible Savings That Others Miss"


    Related Links
    Making Technology Investments Profitable, Jack Keen and Bonnie Digrius
    Make business-case creation a "certified" process: Short, but focused, education for ITPP decision-makers, project managers and business analysts can strengthen the crucial business value foundation of good ITPP-based decision making.

    Overcoming Management Anxiety
    Senior managers have typically built their career upon a reputation for good judgment. Thus, they are inherently suspicious of any method they believe (a) subverts their own personal opinions, and (b) uses a confusing analytical approach as a substitute. Warning signs these anxieties are present include: poor attendance at ITPP informational sessions, managers' failure to pro-actively allocate resources to ITPP initiatives, and unwillingness to make decisions reflecting ITPP's carefully crafted guidance. Solutions include:

  • Educate managers in clear and concise ways: Place less focus on the "beauty" of the ITPP analytics (thus avoiding a perception that ITPP is primarily a "black box"), and more time on the pragmatic benefits of the process surrounding the analytics.
  • Use politically popular executives as pilot sponsors: Reluctant managers are more likely to pay attention to peers whose judgment and leadership they respect.
  • Talk one-on-one with resisting executives: Find out, in a private setting, what's really bothering them. Offer to help them better articulate the business value of their favorite project candidates. Emphasize that ITPP helps assure that favorite projects are approved based on merit, not politics.
  • In essence, ITPP acceptance is about creating a process that management can trust. Embedding reliable "value" explanations, and interacting with skeptics in an informed manner, are two ways to give that trust a giant boost.

    --Jack Keen

    We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
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