There’s one question an IT executive hopes never to hear: “Why did we decide to implement this system in the first place?” But given the length of time between investment approval and go-live on large IT projects, it’s fairly easy to lose sight of the targeted benefits.
One cause for this scenario is an executive team that believes it has a clear understanding of the value that will be delivered by the system but has not in fact conducted a thorough analysis.
Just about every engagement we conduct includes a discussion of the client’s understanding of the value of the planned system. In most cases, a team is required to conduct a cost/benefit analysis to gain support and funding for the proposed solution.
Some companies have mature investment decisionmaking practices that drive specific steps for generating the financial analysis of a proposed solution. These clients use financial analysis tools (often in the form of MS Excel templates or portfolio management applications) that imbed standard assumptions for cost elements like headcount costs, incremental revenue expectations, or standard unit costs for commodities and services. The tools support the company’s financial standards for calculating ROI, NPV, and other business investment analytics to support standard comparisons of potential investments. Clients with less robust tools generally conduct a simpler cost/benefit comparison to determine the potential value of an investment.
Although some type of cost/benefit analysis is fairly standard today, project management practices are less mature when it comes to tracking the value realized by large IT projects. In many cases, the activities required to measure value delivered are not addressed until after the project is implemented or problems are found.
We recommend adding steps for value realization monitoring to the project implementation plans. We find that defining and monitoring a foundational baseline of key value metrics and assessing the continued value throughout the lifecycle helps clients ensure their IT investment are aligned to their business priorities.
The metrics should be something that the majority of the client organization will recognize as important to their business. For example, one client determined the solution it was implementing would support customer retention and new customer acquisition. This easy-to-measure metric became one of three key benefits the client team remained focused on during the entire implementation. Each key milestone readout or decision gate (common project management practices) included validation of the three key benefits and their importance to the organization.
The company executives were reminded of the key success metrics throughout the project, and the project team built in reporting capabilities to communicate benefit gains post-go live, reducing the risk of someone asking why the project was being done.
Post Date: 02/11/2015