Part 1: Maximizing Your Organization’s IT Investments
By Luis Vargas, Director, CFO Advisory
This is part one of a seven-part series on maximizing your organization’s IT investments.
Every organization must decide how to allocate limited human and financial resources across competing needs, and stakes are exceptionally high when selecting suitable IT investments. Research by McKinsey found that large IT projects run 45% over budget while delivering 56% less value than predicted. The same study found that 17% of IT investments go so severely that they endanger the company.
There are many options for investing in IT, from boosting employee engagement to enhancing security to upgrading the customer experience. Deciding which initiatives to prioritize is not easy, but carefully thinking through the consequences and rewards of each gives your investment the best chance of success, now and in the future.
Investing Wisely in IT
When it comes to new IT projects, often the focus is on IT departments and the technologies themselves. There is less emphasis on how well those investments will support the organization’s overall strategy and culture. Research by the Harvard Business Review found that while most companies, for example, understand the importance of the cloud, many invest in it without developing a strategic plan. To keep up with competitors, Companies may rush IT investment decisions, silo implementation, and overlook stakeholder trust, leading to disappointing results and poor ROI.
The success of an IT investment rests on several factors, but it starts with selecting the initiative with the highest chance of delivering the best results for the least cost. The following four criteria can help you make the wisest choice.
4 Criteria for Prioritizing Your IT Initiatives
Here are four criteria to consider before selecting an initiative to pursue. Remember that no single initiative is likely to fit all four perfectly—and that is okay. Every organization has unique needs, so select the most relevant criteria, weigh them according to your needs, and apply them equally to each potential initiative. This should help bring priorities into focus and has the bonus benefit of building a solid and objective case that can help build consensus.
- Well-defined business case
Any IT investment should be able to justify itself with a strong case for supporting the organization’s overall goals and strategy. Some IT executives identify unclear objectives and lack of business focus as the number one cause of project failures. A strong focus on specific business objectives can help teams manage priorities, stay focused, and avoid cost overruns and delays.
If you’re ready to take your company’s technology to the next level, Wiss’ Business Process Review can help identify areas for improvement and provide recommendations that will get you where you want to go.
- Stakeholder alignment and fit with company culture
Some company cultures embrace change, some resist it, and most fall in the middle. Focusing solely on budget and timeline without considering all the people and departments that need to be involved or that could be affected increases the likelihood of delays and cost overruns.
Employees may fear that new tech initiatives could cost them their jobs; customers may not be as excited to embrace change as management assumes. An initiative visible and embraced by employees has a better chance of long-term success. It pays to consider how a particular IT investment will impact stakeholders and the trust equity the organization has built with them.
- The value-to-difficulty ratio
It’s important to consider how much and how quickly an investment can provide value to your organization. It’s equally important to consider how difficult it will be to implement.
An investment with the potential to make a significant difference can be hamstrung by operational complexity, lack of approval, expense, and other forms of friction. On the other hand, improvements that are easy to implement but have only a minor impact may not be worth even the relatively little effort they took. Either extreme can cause stakeholders to lose enthusiasm and interest in the initiative.
- Benefits that justify costs
Naturally, it would help to consider what an initiative will cost, but it is essential to think beyond the cash outlay necessary to get a project off the ground. Instead, consider all potential costs, including time, money, human resources, and the likelihood of a project going over schedule.
It is equally important to really compare those costs with the possible benefits of a given project—and then compare potential initiatives with each other and all of them with the status quo.
The correct initiative, executed well, can have exponential benefits, but the wrong investment can be disastrous. Crafting a set of criteria for selecting which projects to invest in allows for more objective decision-making, helps build a robust case for the initiative you choose, and enhances the likelihood of success.
Still not sure where to start? Wiss’ Technology Advisory Group can help you select, implement, and maintain the most appropriate IT initiative for your needs.
Business Process Review, CFO Advisory, investing, IT, Luis Vargas, Maximizing Your Organization's IT Investments, technology