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Developing and Communicating the Justification of IT Projects

Developing and Communicating the Justification of IT Projects. Three Components. An IT project justification consists of three parts: The strategic business case (qualitative) The ROI analysis (quantitative) The post project audit (accountability ). The Strategic Business Case.

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Developing and Communicating the Justification of IT Projects

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  1. Developing and Communicating the Justification of IT Projects

  2. Three Components An IT project justification consists of three parts: • The strategic business case (qualitative) • The ROI analysis (quantitative) • The post project audit (accountability).

  3. The Strategic Business Case • The strategic business case is the most important component • The strategic business case component is derived from the IT Alignment strategy • Answers the question: “What strategic business goal will not get done, or will be hampered, by not successfully completing this IT project?” • This component of the IT Project justification tends to be more qualitative than quantitative • This component carries more weight with just about everyone of the CXO’s other than the CFO.

  4. The Business Case • For Project #1 homework, do the best you can at showing • What strategic business initiative(s) in your company need this IT project • How it (they) will be facilitated by this IT project • How it (they) will be hampered by not successfully completing this IT project.

  5. The ROI (IRR) Analysis • The costs and the tangible benefits are the easy part • The intangibles are the hard part • Over optimistic intangible estimates damage your credibility and your ability to do the CIO’s job • Too conservative estimates may result in a valuable project not being funded • Remember: The dollar valuation of the intangibles MUST NOT be perceived to be an “I.T. number” • Secret to credible effective intangible estimating: get the other CXO’s to weigh in and then let the CFO assign the final intangible numbers to the project • Takes a lot of coordination and communication (but this is good for your career and the future effectiveness of IT) • Takes more time • Keeps your neck out of the noose.

  6. Warning About the ROI Analysis • Don’t get too detailed • This is only a rough estimate (it can’t be more than that) • Not done for smaller projects, you must decide where the threshold is • DO NOT rely on ROI analysis alone to make resource allocation and prioritization decisions—the business case will likely carry more weight.

  7. The Post Project Audit • Answers the two questions: • “Did the IT Project accomplish what it was intended to do?” • “How can we do a better job of estimating benefit next time?” • Planning for post project audit: • use ROI calculations to generate metrics that will be used in one year to measure success • How will you measure the impact on strategic business initiatives • BEFORE the project goes up for funding approval, you must assign specifically: WHO will take WHAT measurements HOW and WHEN and to WHOM will these be reported • Sometimes, this pre-planning for post project audit will change focus, priority and approach for the IT project! (For class discussion: Why?)

  8. Questions for Class Discussion: • What are the three components of an IT Project Justification and why are all three important? • What are the political parts of an IT Project Justification and how will you do these in your company? • What happens if you skip the Post Project Audit planning? • What if you did all this work for a large IT Project and it didn’t get approved? Was this all a waste of time?

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