Project Prioritization and Project Management pave the third leg of the IT Value Journey and complete the road from the Maintain state to the Enhance state.
Previous articles discussed the importance of IT Customer Service and Infrastructure Management. We presented techniques and metrics to build the trust, credibility, and respect needed to advance IT from the Maintain state to the Enhance state.
The final leg of that journey focuses on Project Prioritization and Project Management as the gateway to the Enhance state. The next articles will explore how we navigate from Enhance, where we keep up with required business needs, to Transform, where we can fundamentally change the business to drive new revenue and cost savings.
Current State
IT organizations in the Maintain state tend to serve the most vocal internal customers, without understanding the value proposition of the work they’re asked to perform. Some of these IT groups use a flavor of Agile software development and Scrum project management, but we usually see a lack of business focus and metrics.
Project Prioritization
I was recently helping a company with their digital transformation. We evaluated what IT was working on and discovered that projects were generally approved and executed based on a simple end-user request. We worked with the user community to identify the business value of projects completed in the past year. Then, we asked IT who worked on each project and for how long, enabling us to calculate cost. Not surprisingly, we learned that for every $1.00 we saved the company, it cost $2.20 to deliver the solution.
With those two simple measures, we created a visibility and understanding of how precious IT resources were being consumed. Very soon thereafter, we implemented a process to identify the business value of any project request and estimate the cost. Business leaders were thrilled with the new visibility and transparency, earning IT some well-deserved trust, credibility, and respect.
A similar process should be used during strategic planning season. Work with your business leaders to estimate the value of proposed projects for the year and estimate the cost to deliver those projects. Prioritize initiatives from greatest return on investment (ROI) to least. Then, assign IT resources to each project, starting at the top of the list. When you run out of resources, determine whether outsourcing, contracting, or hiring will enable you to complete additional project while preserving a favorable ROI. When the numbers turn negative, IT draws the line and reports the results to the rest of the business.
You now have your project portfolio for the year. As new requests come in, IT should negotiate with business leaders to determine what should come off the list. Again, you’re looking at the value proposition to ensure IT focuses on the most lucrative projects for the business.
The complete transparency makes IT less of a black hole to pour money into and more of an asset that is to be managed for maximum return.
Project Management
The same transparency that goes into project prioritization should be applied to project management. Whether you use waterfall or Agile techniques, there are common principles that should be applied to ensure accountability, measurement, and great communication.
Every waterfall project, regardless of whether it’s software development, third party software implementation, infrastructure management, or even relocating a facility will have similar critical milestones. Remember, critical milestones define the critical path of a project, meaning that if any critical milestone is missed, the project cannot be completed on time, within scope, or on budget.
The common critical milestones include:
- requirements gathering,
- solution design,
- development,
- testing, and
- deployment.
These same milestones apply to Agile sprints, although you may not always deploy features at the end of a given sprint.
At a minimum, track those five critical milestones. Review each project, or each sprint, and see where your team is estimating accurately and where you tend to miss. Use these findings to drive continuous improvement. You’ll be amazed at how quickly your estimating improves.
Remember to do workload swapping to manage scope. A new feature request must be offset by either elimination of another feature or an approved change to time, scope, and budget. Agile practitioners can use burn-up charts to track scope changes and progress against the estimated timeline. Waterfall project managers should track changes against the baseline work breakdown structure, resource allocations and budget.
We like to keep a chart of scope changes and workload swapping so that, at the end of a project, we can show what was added, what was eliminated, and the net increase or decrease in story points. If the net scope increased, then time and IT resources should increase proportionately, and you can illustrate that for your business leaders.
Measuring the Value Created by IT
We just saw how to estimate the ROI of projects during strategic planning and budgeting season. So, we know what value should be created by each project that consumes IT resources.
Then we saw how to measure project execution with accountability for scope changes and techniques to create visibility and transparency. These enable us to track, and account for, changes and continuously improve our estimating.
The key metrics to report to business leaders and across the company are:
- Percent of projects completed on time, within scope, and on budget
- Net scope changes and associated costs
- ROI of projects that consume IT resources
We ask business leaders, or executive sponsors of projects, to commit to the expected value of an initiative during budget season and then confirm that estimate at project completion. If your Accounting department is capitalizing projects, then meet with Accounting and each project sponsor at least quarterly to confirm the ongoing value created by the project (revenue gains and/or cost savings) and confirm that Accounting can continue to depreciate the asset). Now, IT can report every quarter and every year on the value created by projects that consume IT resources.
I once had a CFO that certified, every quarter, the value created by IT. We put more than ten million dollars a year on the bottom line. When business leaders continued to see those numbers, IT earned great trust, credibility, and respect. We quickly moved from Maintain to Enhance on the IT Value Journey and soon got to drive initiatives that transformed the business.
Conclusion
The IT Value Journey starts on the road from the Maintain state to the Enhance state. Two important things are happening throughout the journey. First, IT is continuously improving its processes and services, freeing up resources to shift to work that creates more value for the business. Second, IT is building trust, credibility, and respect with their business colleagues.
These first three articles described processes and metrics to navigate the journey from Maintain to Enhance. IT becomes recognized for the value you create, and your techniques enable you to keep up with business priorities rather than simply keep the lights on.
Working in the Enhance state is much more fun and rewarding than the Maintain state, for IT and the entire business. The next few articles will describe the IT Value Journey from Enhance to Transform, and what to do once you reach the Transform state.
How Are You Doing?
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Larry Wolff is the founder & CEO of Wolff Strategy Partners, a boutique consulting firm specializing in Enterprise Strategy Management and Digital Transformation. Larry has served as CEO, COO, CIO, chief digital officer, and management consultant for public, private, international and emerging growth companies. His specialties include corporate and IT strategic planning, technology led business transformation, business and IT turnarounds, merger integration and large-scale project rescues.