The Principles and Practices to Prioritize IT Projects

 IT project priority should reflect business priority.

IT project priority is critical for many organizations, as most of IT organizations are still at lower level of maturity, being perceived as cost center, slow response to business’s request, spend most of the resources on “Keeping Light On,” it’s a department usually under-budget, overloaded with projects assignment, and with reputation on over-promise and under-delivery. Many IT leaders cite mistakes in managing the demand pipeline, either by not communicating and setting priorities well with the business units, or just taking on too much and crushing their team. So how to prioritize IT project is a starting point to improve IT maturity, here are five steps to evaluate IT project priority more comprehensively:

1. The Projects need Align with Business Strategy/Culture

IT project priority should reflect business priority. The project evaluation is part of the Strategic Business Plan, priority is based on the business priority as identified by the main stakeholders to meet the identified business strategic objective. The series of questions need be asked to evaluate a project’s strategic value may include:

• What is Business Value?
• What does the project mean to my customers?
• What does the project mean to the Organization’s stakeholders?
• What contribution can I expect from the stakeholders?
• How do I measure Business Value?
• How do I ensure that the correct Business Value is delivered?
• What is CIO’s role to set IT project priority?

With the possible exception of projects that involve the replacement of obscure pieces of infrastructure that the business has little to no exposure to, the majority of projects should not be called "IT projects". With that said, the short answer is: IT resources should be allocated in direct alignment to the vision and strategy of the enterprise. In organizations with lower IT maturity, CIOs may be CITO –Chief in Title Only, In one sense, they don't "set" priorities at all, mainly CEO or CFO makes final decisions on project investment. However, in high mature business & IT, CIO has a seat in the big table, to co-develop business strategy, and co-make key business decisions, as IT becomes the catalyst in business, CIO should play a more pivotal role in deciding project priority from his/her own unique position.

Internal IT projects are prioritized by the IT leader based on how effective they are in achieving the IT Strategy. CIOs don't set priorities in vacuums. Rather, they'll use the enterprise's strategy and business objectives to determine which capabilities are needed to enable it to achieve those objectives and then execute projects to build or solidify those capabilities. Depending on the enterprise, the CIO may play a partnering role in determining the strategy and business objectives to begin with. Furthermore, the most mature organizations succeed across a number of dimensions. These successful organizations are, in particular, strong at linking projects and programs to business strategies, establishing strong cases for change, and maintaining a good “project culture”. Success is less about the fact that a set of project management standards exists, it has more to do with the quality and commitment of people, the collaborative culture of project delivery (business and technical) and the maturity of ingrained project delivery practices within the organization.

2. Leverage the Priorities of Different Stakeholders

Business value to both the organization’s internal stakeholders and their customers are well analyzed subsequently, this business value needs to be defined in simple terms based on Cost, Time, and Quality (CTQ), effectiveness, efficiency and flexibility on the other side. Each of these terms is meaningful and allows for the natural relativity between the priorities of different stakeholders. But at least, we all know where a job lies in the local scheme of things and it provides everyone with a common language, rather than clouding the issues with mismatched numerical scoring.

As operations and business partners always have an endless list. This is when you have to do the hard thing once the impact, ROI, integration etc. factors bubble sort the projects. Then you ask for the best and brightest from the business for further feedback. Once you show the C-Levels the project list and what is above and below the line, under& behind the scene, they'll speak their minds with knowledge, business authority, and the financial investment wisdom behind it.

Most of the common project failures due to there's a disconnect between the business process innovation that business units want and the basics that IT is getting ready to deliver. Thus, how to leverage the priorities of different stakeholders is strategic critical:

• To leverage finance discipline: Companies should always align these IT decisions with conservative principles of financial management: Underestimate revenues and overestimate costs.

• To leverage marketing/business perspective: Which technology area has grabbed the attention of non-IT partners? for instance,  if we had surveyed CMOs and their direct reports instead of CIOs and their reports, social networking would be near the top of the priority list. Yet the social enterprise sits at the bottom of IT survey respondents' list due to CIO’s risk concerns;

• To leverage architecture view: Architecture is about finding the prioritization mechanism base on defining the risks, constraints, and trade-offs that a business faces. This may not solve the political battle, but it defines the priorities in a logical and visible fashion.

• To Leverage PPM System views: The IT portfolio is a component of the business portfolio. IT projects and portfolios exist to support and enable the business. The effective PPM systems can support a holistic view of the enterprise through their user-defined capabilities. The ability to define multiple sub-portfolios and views gives each of the stakeholders their unique view into programs and projects in their area of interest.

3. Project Classification & A Common Set of Prioritization Criteria

Again, the days for "IT Projects" are long gone. Projects that once fell under the classification of "IT" must now be classified as strategic business solutions that meet the needs of the organization as a whole or organizational units within the enterprise. That being said, such projects are prioritized along the lines of the goals and objectives of the organization and its constituents. As a result, "IT" becomes a strategic business partner rather than a technical resource.

IT projects = Business Projects. But let us face it, IT undeniably becomes an integral part of any viable business - however still in the back mind of most business leaders, IT is a complex and expensive technological gadgets that enable/enhance business processes and outputs that are sold to clients - could be service to the general public or goods. For some unforeseen future, we will still hear the classification of IT Projects for business enablement activities - such as automation of business process and development/ implementation of core IT infrastructural services. That also being said, unless everyone is sharing a common set of prioritization criteria, there are bound to be problems sooner or later. How to classify project more clearly, and all parties have the same, at least, similar set of criteria to evaluate project priority? For example, the projects can be prioritized, classified into Run, Grow, Transform and Compliance:

• Run the business projects: Prioritize based on the value offered or loss avoidance. These are tactical in nature. Make a special effort to fund projects with a payback of 3 years or less. 

• Grow the Business: These are more difficult to prioritize. Partner with business to understand entry, exist, risk permanence and value generation strategy. It’s critical in M&A IT integration or when business enters new markets. This will help define the delivery model and checkpoints for future expansion.

• Transform the Business: Changing the way of business. Use of new technology, business process, partners, business model, joint product development, supplier integration and use of real-time, accurate, predictive information. 

• Business Compliance Projects - Plan and Execute (No analysis paralysis). The project can also be classified into: (1) Immediate/urgent: should be reserved for those items that are genuinely serious, immediate risk to personal or corporate safety & security; (2) Mid-term: the project helps business growth, such as integration, process optimization., etc. (3) Long-term: project for business transformation, such as new process, business model or service/product development., etc. .Or some organizations require CIO to put a document in great detail where the current IT dollars are being spent. There are three main categories: The first category is to keep the lights on, maintaining the already implemented architecture, upgrades to hardware and software security etc. The second category is to work currently under development identifying the approved resources by the project with a 12 month forward looking accounting for each. The total resources for categories one and two may account for 100% of IT's approved resources. The third category lists the requested "NEW" work for which there are no resources committed. The further questions can be digging through: 

           -How are you feeling about your team's IT project portfolio? Optimistic?
           -Will some of your top projects save the company money along the way? Will all of them?
           -When it comes to budgeting and setting expectations, are IT managers upbeat?

4. Effective Process to Prioritize IT Projects

How to well define the process to not only prioritize project but also manage project lifecycle more effectively? The key element in the solution is to establish a method & process in which the realization of Business Value is the primary focus on prioritizing, planning, scheduling, and execution of the project. More specifically, here are some checkbox questions:
-What’s the proposal required against other competing projects?
-What do you use to argue for limited funds and resources?
-Are your projects being selected on the basis of the power or politics of the project sponsor?
-Do “bad” projects find their way into the mix because risks are understated, or ignored?

As CIO, you know which projects out of your pool are important to 'the business' and what is the business's desire level. Then you can evaluate your internal resources (manpower, required expertise skills, budget, time requirements, dependencies ...) and make the first draft of a prioritization list of projects. Splitting the list into a time scale, you can remove those who can't fit for various reasons. With this list, you can do the same round with CxO peers and do agreements, deals, seeking sponsors and support, once finished, you have a list of projects that are liked and supported by the business and that you know you can manage with your staff.

The further interesting question is: WHO “officially” sets priorities? CEO, CFO or CIO? Priority setting is another name for making purchase decisions within the bounds of finite resources. Ideally, this is a business-driven portfolio-management process, and it takes collective effort to set project priority, the level where Business Value should be managed as following:

• CxO level
• Steering Committee members
• Senior Program / Project Managers and Delivery Directors Senior Account Manager
• Audit to comment on the validity of the post-implementation measurement process. 

In reality, unless the firm applies a structured PPM process, to build and manage portfolios of properly evaluated projects, there will be an enormous waste of time, money and resources, often leading to business failure. On the other side, the right process should be effective, not bureaucratic, streamline, but not stiffened. The effective project priority process should unify disconnects in the joined-up-management of the organization, also provides an essential basis for dialogue between parties, especially when each party publishes their prioritized work-in-progress schedules. Key stakeholders must be involved and fully understand the nature of projects, their impact, and relation to business objectives. As business needs, priorities change, so will the priority of the IT projects. An effective process also level the playing field and cut through the politics and culture.

Agility is the theme of IT delivery at the digital era, so the larger size, multi-year projects should be prioritized in pieces and in conjunction with other companion initiatives. Focus should be on near term and long-term value and strategic impact. In addition, many companies structure their reward systems—that lead managers to become risk averse or unwilling to tolerate uncertainty even when a project’s potential earnings are far larger than its potential losses. Thus, the effective process can evaluate project risk more intelligently.

 5. Continuous Project Review

At today’s fast change business dynamic, organizations need regular reviews to ensure that previous assignments remain valid. Such reviews provide excellent opportunities for stakeholder engagement and dialogue, which adds to the integrity of the organization, make a strategic adjustment and dynamic project planning. 

At project portfolio management level, the continuous project review includes doing investment optimization, proposal/asset analysis, senior management strategy review, business benefits realization., etc. Either PM, PPM or project prioritization, besides process, people are still the weakest link to make a fair judgment. Especially at “C” level, an effective executive should be surrounded by the best and brightest available who draws on and complement & concatenates their thinking and takes on a role of being a 'reasonability check' of the proposals and insights presented.

Review Business Value measures objectively and frequently. If requirements change, the project content also has to change with them.  Plan and schedule each phase of a project to deliver specific improvements to the Business Value measures:

- Linking projects and programs to business strategies
- Establishing strong cases for change
- Maintaining a collaborative “project culture”
- Quality and commitment of people
- Maturity of ingrained project delivery practices

- Measure the project deliverables using Specific Measurable Achievable Realistic Time-based (SMART) Business Value objectives

In conclusion, project prioritization takes a collective effort, effective process, and strategic alignment. IT project priority is part of business/IT governance discipline, it takes both business and IT parties working seamlessly to understand business strategy, priority adjustment, and market changes, it should share the common set of criteria, and evaluate all sort of variables, one thing is certain--as now business change is accelerated, project portfolio may need to be managed more dynamically, and reviewing business value of project more frequently, strive to balance even in your prioritization.

Posted in: CIO Debate,Project Management