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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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three components
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
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.
the business case
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.
the roi irr analysis
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.
warning about the roi analysis
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.
the post project audit
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?)
questions for class discussion
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?