Prioritizing Projects In Your Portfolio – Take Out The Emotion!

Author by Randy Steinberg

Far too many times, IT organizations struggle with finding a fair means to prioritize the projects they will invest in. These sometimes turn into near war zones where each business unit fights to get their pet projects into the mix. Company politics may divert funding to those business units with the most clout versus what may be truly best for the business.

In one example, a large engineering firm had an aggressive strategy driven from the top to grow their business dramatically through acquisitions and takeovers. Yet their portfolio had hundreds of small projects, each under $100K that were chewing up the IT budget on back-end financial systems and improvements. How did this happen?

The IT organization was led by a CFO who also carried a lot of decision making clout. The IT organization itself was in job protection mode hiding people into lots of smaller projects that were under the financial radar in size. End result? Tens of millions of IT dollars invested in projects that were totally out of alignment with an aggressive business strategy.

Managing the portfolio can be done more effectively with use of an agreed scoring system based on key criteria. Through this, decisions can be made based on facts and scores versus raw emotions and competing business agendas.

Consider these 4 key areas for any project in play:

  • Value – what business value will be achieved as a result of the project? (E.g. financial return, new markets and products, fight back competition, lower operating costs).

  • Strategy – is the project in line with the business strategy? Does it further execution of that strategy?

  • Risk – can the project be done safely? Will implementation of the project pose threats to day-to-day business operations?

  • Cost – Considering both one-time and ongoing maintenance - can the project be done at acceptable cost?

A scoring mechanism and weightings can be used for each of the above areas. Keep it simple. Use a 1-10 scale where the higher a score is, the greater the priority should be. A set of scores should be developed for each project in the portfolio. A suggested set of criteria for each area and some examples is presented below. Although only the high and low scores are described, any number in that range can be used if the answers are less clear.

Area

Criteria

Description

Examples

Value

Cost Containment

Does this project reduce costs or prevent future costs?

Scoring range where 1 = > $1M and 10 = < $100K

Value

Revenue Generation

How much of a return will this project yield?

Scoring range where 1 = < $100K and 10 = > $1M

Value

Innovation

Does this project create a unique market position for your company that cannot be easily replicated?

Scoring range where 1 = No and 10 = Yes

Value

Global Performance and Automation

Does this project optimize and create efficiencies that will raise delivery quality?

Scoring range where 1 = No and 10 = Yes

Strategy

Growth and Expansion

Does the project outcome open new markets or expand the number of customers?

Scoring range where 1 = No and 10 = Yes

Strategy

Optimization of Knowledge and Expertise

Does the project outcome reduce dependence on individuals for specific knowledge or expertise?

Scoring range where 1 = No and 10 = Yes

Strategy

Standardization and Common Systems

Does the project outcome standardize and centralize redundant tasks or systems?

Scoring range where 1 = No and 10 = Yes

Risk

Project Risks

What level of risks exist in completing the project?

Scoring range where 1 = Very high risks and 10 = Minimal or no risks

Risk

Regulatory Compliance

Will the project outcome allow the organization to meet industry, regulatory and legal requirements?

Scoring range where 1 = No and 10 = Yes

Risk

Resources and Skills Risks

Are resources and skills in place to execute on the project successfully?

Scoring range where 1 = No and 10 = Yes

Risk

Technology Risks

What levels of risk exist with the technologies being created or used by the project?

Scoring range where 1 = Very high risks and 10 = Minimal or no risks

Cost

Time To Complete

How long will it take to complete the project?

Scoring range where 1 = > 1 year and 10 = < 3 Months

Cost

Total Project Costs

What are the total costs to complete the project?

Scoring range where 1 = > $1M and 10 = < $100K

 

Weightings can be added to any of the above criteria as well as the 4 areas if so desired. For weightings, multiply any score by a weighting factor. The default should be one. If you desire to emphasize a particular area (e.g. cost for example) than make the weighting factor a higher number.

Create the above for each project in the portfolio and rollup the scores to see which projects end up with the highest priorities.

One way to summarize this for each project might look like the following:

In the above, the presentation could be interactive such that the sliders can be moved up or back to see the prioritization results.

Yet another approach simply plots out each project score as shown below. With this, all projects can be viewed against each other.

Lastly, the chart below summarizes the top projects and identifies an investment strategy. The investment level is plotted based on the prioritization scores.

 

Presenting each project in terms of a standard set of criteria, weights and scores can go a long way towards making more informed decisions on where to spend valuable IT dollars. Put these in place and get the politics and emotion out of the way!

Catch more of this at the upcoming CampIT conference in Chicago on June 24th.

http://campconferences.com/events/2016/portfoliochicago.htm#Steinberg

Author

Randy Steinberg

ITSM Process Architect

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