The Prioritization Practice

Process Overview

In its simplest form, Prioritization engages the business managers of an enterprise in assessing the bottom-line impact of proposed IT initiatives using the same yardsticks for every project. Risk assessment may also be included in the assessment. The result is a prioritized ranking of projects with which management can rationally allocate resources to the highest value initiatives.

Mechanically, the process involves five steps:[1]

1. First, the process engages senior managers in defining the strategic intentions for the company, assigning a relative weight for the importance of each, and coming to consensus on the definitions and scales with which IT projects will be assessed.  Through this consensus-building step, senior managers can be assured of consistent interpretation of strategic intentions, while signaling the organization that IT initiatives will be assessed fairly, consistently, and from an enterprise perspective.

2. All IT projects are described in business terms in a short, consistent way, providing a single source description for all proposed IT initiatives.  The business sponsor of each project is responsible for this description.  In this way, the company has a complete, business-oriented view of its IT initiatives.

3. Using a defined cause-and-effect scale for each strategic intent, managers assess the predicted impact of every initiative on each of the strategic intentions.  Managers are looking at cause and effect relationships between projects and strategic intentions: if we do this project, what impact will it have on each of our strategic intentions? Each manager must assess all projects.  This step results in wide understanding in the business managers of all IT initiatives, how they relate across all parts of the business, and their impact on the strategic intentions. 
   
   For the simple example shown here, each initiative is assessed for impact on the strategic intention (the impact column.) In addition, each initiative is rated for business and technical risk, and the resources required identified. In this case, the company believed the scarcest resource was its professional IT staff, not dollars.

4. In a joint forum, the assessing managers review all assessments.  This allows for open discussion of different assessments and subsequent consensus development of the resulting priorities.

5. IT develops a proposed project plan based on the priorities, resource constraints, and scheduling dependencies.

Result

The overall result is an across the board understanding of IT's complete efforts, their impact on strategic intentions, and the resources required to move forward.  Most important, the process foments change in the underlying management culture regarding IT.  IT becomes a set of high-value initiatives, focused on the strategic intentions, with business management buy-in of the business impact of IT efforts.  S

The prioritization of IT initiatives is based on the cause-and-effect connection between the IT initiative and the strategic intention.  We ask the specific question:  if we invest in this IT initiative, what will be the predicted effect on each of the company’s strategic intentions? For example, if the IT initiative is a customer information system, then its expected impact on cost reduction might be minor, on supplier of choice, perhaps none, but on Acquisition Capability, the impact might be a major component of what is required to acquire and integrate a new company.

Prioritization is done through a structured assessment that carries out the logic described above.  The figure below  shows the specific assessment of a proposed customer information system, against strategic intentions.

The prioritization practice can include financial aspects of initiatives such as ROI, risk factors, and the more elaborate forms of option theory that work to quantify the estimates risks and financial returns.  All of these are applied in the prioritization rank-ordering process.

Note that, in the above prioritization scorecard, the strategic intentions are: 

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