REJ from Microsoft Chris Gibbs November 5 th , 2007 MBA 731. What is REJ?. Microsoft Rapid Economic Justification (REJ) Guide Designed to look at ROI faster than a traditional ROI study Allows completion of the project assessment process in two to four weeks
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November 5th, 2007
Microsoft Rapid Economic Justification (REJ) Guide
Designed to look at ROI faster than a traditional ROI study
Allows completion of the project assessment process in two to four weeks
Assists in planning by establishing benchmarks to identify which IT investments make sense
Helps focus on the business aspects of a vision, assisting in identifying the stakeholders, the key measurements of success, and the alignment of processes to be improved by mapping them to critical success factors
More than 2,000 REJ projects have been conducted by organizations around the world since 1997
The REJ framework provides:
Process: Step-By-Step Approach
Tools and Content: REJ Workbook in Excel, ROI and TCO calculators; data, research papers, reusable evidence, documented patterns, etc.
Deliverables: Templates, courseware, videos.
Environments where business conditions change rapidly
Traditional ROI cost or time prohibitive
“Pretty close” is sufficient accuracy
Lack of long term attention by stakeholders
Scenarios where there is no effective way to obtain the data needed to assess the benefits of a specific IT initiative
Fiscal year planning
Synchronization with line of business activities
Competing for best use of scarce resources
Emerging technology recognized
Transparency for relevance in portfolio
Lack of executive sponsorship
Planning an REJ project includes the following work:
Assess how the final financial decision will be made
Communicate with each potential stakeholder
Identify the desired structure of the final deliverable for all stakeholders
Set expectations for REJ project activities
Identify required resources
Plan the REJ kickoff meeting
Task 1: Identify the KPI that is essential for each stakeholder to achieve his or her mission.
Task 2: Identify KPIs that represent the current and desired states. Then conduct a gap analysis that identifies the order of magnitude of what the IT initiative must accomplish to meet the desired state.
Task 3: Verify that the IT initiative is aligned with selected stakeholders.
Does the organization have a balance scorecard?
Does the stakeholder have a dashboard?
What is in the monthly or quarterly report that the stakeholder provides to the organization?
Does each specific KPI directly map to the appropriate CSF and stakeholder?
Is the KPI measurable?
Does the stakeholder have current-state benchmarks for each KPI?
The Business Assessment Roadmap with all KPI-related information filled in for each CSF.
Economic Justification Report consisting of
Cash Flow Projections
Financial Ratios and Decision Making Point
Economic justification provides the answer to questions that executives need to know before they approve an investment, such as:
How much will it cost to reach those benefits?
Has anybody optimized this project from a ROI point of view?
How soon will the business sponsor see the effect on the business activities and processes?
How does this investment compare to other ways we can use our capital?
REJ helps IT managers identify targeted business benefits that justify the use of resources and the risks during change
REJ doesn't consider heavily the time value of money
REJ attempts to quantify issues difficult to account for in a ROI study, such as reduced time for developing marketing collateral and enabling better communications
Gartner’s Total Value of Opportunity (TVO)
Used to develop sophisticated ROI assessments
Links IT capabilities to business performance improvements
Assists in measuring the impact of IT projects
Establishes 36 metrics that best measure revenue gains, cost savings or other value generated
“Build an airtight business case for new IT Adjustments” Microsoft. 12/12/2005. http://www.microsoft.com/business/enterprise/value.mspx
“Rapid Economic Justification Guide” Microsoft. 2005. http://download.microsoft.com/download/d/5/9/d59bf238-969a-4167-8203-90348e0e2628/REJ_Enterprise.pdf
“Rapid economic justification service” Fujitsu. http://www.fujitsu.com/au/services/solutions/microsoft/portfolio/
“The ABCs of ROI” Curtis Franklin. April 29, 2002. http://www.networkcomputing.com/1309/1309ws1.html
“Use this cost/benefit model to prove IT value to clients” Rick Freedman. http://articles.techrepublic.com.com/5100-10878_11-1039315.html
“Gartner Total Value of Opportunity” Gartner. http://amt.gartner.com/TVO/