The Prioritization Practice
Approach
Business-based
prioritization is the tool for assessing the bottom-line impact of IT
projects and assigning resources to the most valuable. It answers a
fundamental management question:
How does the company
make technology investment decisions, and how can it develop business
management consensus on where these investments should be made?
The Prioritization Practice focuses on
assessing the business value, in terms of bottom-line impact, of proposed IT
investments. On its surface Prioritization addresses a straightforward
question: which of the proposed IT investments provide the most return to
the company, when assessed by their intended impact on strategic intentions?
In practical terms, this is a much more complicated issue, requiring answers
to other questions, such as what is assessed, who assesses, against what,
how often, how are resources assigned?
Companies want to allocate limited
resources (dollars, people, time, and management attention) to initiatives
that will produce the greatest "return" to the enterprise. While there are
several prioritization methods being used in IT today, the issue goes beyond
determining if individual projects contribute to the enterprise's financial
or strategic success. Management faces a number of serious questions about
how it is assigning IT resources:
-
Are IT
investments strongly connected to strategic intentions?
-
Is the
company putting its IT resources into the areas most valuable to the
company?
-
Is there a
partnership between IT and business management for making the IT decisions?
-
Does company
management understand where IT investment resources are going?
-
Are IT
investments described in business terms?
A process, and more importantly a
philosophy, is needed that embraces the following principles:
-
Bottom-line
impact is based on an initiative's predicted impact on strategic intentions
(which can include ROI calculations as one component).
-
Business
management is responsible for assessing the bottom-line impact of IT
initiatives.
-
Business
managers should understand fully the business impact of all of the IT
initiatives, not just the ones in their area.
-
Investments
are assessed individually but prioritized as a complete set, across the
business unit.
-
Investments are described in business
terms, addressing the business issue, business requirements and risks, and
return on the investment.
In the past, companies have equated
"return" with ROI, which limits the bottom-line impact assessment to
financial (and in many cases questionable) justification. In the NIE
environment, "return" includes not only financial justification but also an
investment's potential impact on the enterprise's strategic intentions.
Next Page:
The
Mechanics of Prioritization
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