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When you're deciding which projects to keep and which ones to scrap, you need an effective way to establish priorities. Here's a basic collaborative approach and a tool to make the process easier.
No organization has the resources to do every project that comes along. One of the key functions of corporate leadership is deciding which initiatives are going to move forward and which ones need to be tabled. For an IT department to be successful, an effective approach to prioritization is key.
A mature organization will have a formal prioritization process. Projects will be defined and scoped. A business case will be developed. Maybe the project will be passed up to a PMO who will vet it and analyze it with respect to corporate strategy. In this world, projects are prioritized based on factors such as:
- Business value
- Resource availability
- Strategy alignment
In other organizations, the process may not be as formal. Perhaps the CEO makes some of the decisions unilaterally. Maybe each business owner lobbies for his or her own initiatives. Maybe the corporate opinion on what is most important shifts from week to week (or from day to day). In this world, prioritization may be based on the factors above. But it may also be based on:
- Whoever is talking the loudest
- Knee-jerk responses to some unexpected event
Needless to say, the first list is a better set of criteria than the second.
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In my experience, when organizations struggle with prioritization, it frequently falls on IT to take the lead. It is a natural fit — IT is often a change agent in the organization and is heavily affected by prioritization (or lack thereof).
What follows is one common approach to prioritization and a tool to assist with it. I have used this approach successfully at the corporate level when no formal prioritization process existed. However, it can also be used at a departmental level.
A simple two-step prioritization
1: Compile your list of projects
The first step in the process is to itemize the projects competing for attention. If you are prioritizing at the corporate level, this should include all of the Big Initiatives: new product concepts, major organizational changes, system migrations—all the big projects that are the focus of the business or departmental leaders. If you are prioritizing at a lower level, for instance for IT discretionary projects, the list will contain smaller projects such as software upgrades, hardware refreshes, smaller system enhancements, refactoring projects, and the like.
In an ideal world, this is a list that is already being tracked. But it never hurts to take a look through the old emails, the helpdesk system, and any other tools to see what might have been captured and is worthy of consideration.
2: Collaborative prioritization
The goal of collaborative prioritization is to bring all the decision makers into a room and, in a structured manner, drive to decisions on which projects are going to make the cut. Having everyone involved ensures that all voices are heard and ideally will result in a unified front once decisions are made.
These sessions aren't always the easiest. The following tips will help you achieve a positive outcome:
- Hold the session outside normal business hours. Hopefully, this will prevent participants from constantly getting up and leaving to deal with operational issues.
- Keep it informal. Hold the session somewhere other than the office, if possible. Maybe serve dinner. If your culture allows it, serve drinks.
- Make sure everyone understands the goal (a clear prioritization of initiatives) and the process to be used before the meeting begins. (We'll look at process next.)
- Be prepared to facilitate. If you have strong personalities, more aggressive facilitation techniques may be necessary to make sure the group doesn't get sidetracked and to be sure that all voices are heard.
The process for prioritizing is a common one. Each project is placed on a cost/benefit graph.
Once everyone can see this visual representation of the projects, establishing the priorities becomes much easier.
This is hardly revolutionary. The accompanying Prioritization Tool, though, provides some resources to make the process easier.
It is critical to understand the goals of the session. You may decide that your session will end, for instance, once you have selected priorities, assigned project owners to each, and established next steps.
The Prioritization Tool
Before we walk through the Prioritization Tool, note that it's a macro-enabled workbook. Do not be alarmed (even if your antivirus is)!
On the first tab (Prioritization) is a worksheet for itemizing projects. The unshaded columns are for entering data. The first few are to enter the project name, project owner (leave blank if unknown), department, and any notes.
Then, for each project, there is a ranking system for coming up with a value for cost, benefit, and risk. For all three categories, the ranking is determined based on a number of factors. For cost, the following factors are considered, each with a scale of 1 to 10:
- IT Resource Cost: How much investment of IT resources is required for the project?
- Hard Costs: How much non-resource investment is required, such as licenses, equipment purchasing, or outsourcing?
- Business Resource Cost: How much time will be needed from business resources to complete the project?
- Operational Cost: Once the project is complete, how costly will it be to maintain?
An additional factor is considered when assigning project risk: If no project owner has been specified, the risk is increased.
These are all relative values. The intention is not to come up with precise dollar figures. We just want to understand how different projects compare to each other.
Enter a value from 1 to 10 for each factor. The shaded Total will be computed. Note that these factors are weighted and all of it can be customized. If you don't like the weightings or factors that I have used, they can be easily changed.
For benefit, the following factors are considered:
- Ability for the project to reduce expenses
- Ability for the project to increase revenue
- Ability for the project to reduce corporate risk. (Many projects can be important based on risk reduction, such as compliance projects or security initiatives.)
- How long the project will be valuable (i.e., what is the shelf life?)
Unlike the standard cost/benefit ranking, this tool adds a third axis: project risk. Project risk is calculated based on the following:
- Scope: How well defined is the scope of the project? Poorly defined scope equates to more risk.
- Resource Availability: How likely is it that resources will not be available to see the project through to completion?
- External Dependencies: Does the project depend on external factors that are outside the control of the project leadership or company?
The second tab (Summary) is where the magic happens. You will see on the left of the sheet that the project list is summarized, along with each ranking. When you click Build Prioritization Chart, a macro runs that creates the cost/benefit chart (assuming you have enabled macros). It has the added advantage of sizing each project according to project risk. Larger bubbles represent higher-risk projects.
Ways to use the tool
There are a couple of ways you can make use of the tool. One is all digital. Your process for the prioritization session could be to use the tool in an interactive manner. Fill out the list of projects before the session. Then, during the session, project the tool on a screen and work through the cost/benefit/risk factors collaboratively. You can flip back and forth between the Prioritization worksheet and the summary graph until everyone is satisfied that the relative rankings make sense. I have successfully used this approach with more tech-savvy participants.
There is a much lower-tech way to go, too, which may play better with a nontechnical crowd. For this approach, you still fill out the list of projects before the session. It also makes sense to fill in as much as you can on the owners and the cost/benefit/risk factors. These are just starting points, though.
For the prioritization session, use a large whiteboard and draw the cost and benefit axis. Then, print out a ticket for each project. The PrintOuts tab assists you with this. You will see each project placed on a ticket you can cut out.
It helps to print these on color paper so they are easier to see on a whiteboard. (For extra credit, you can color-code the printouts according to department, owner, and risk.)
During the prioritization session, tape the tickets onto the whiteboard and move them around based on the conversation of the team. Like I said, this is a low-tech approach, but it can be very effective. With this approach you can do the following:
- Pull off projects that are eliminated from contention, crumple the paper up and throw it on the floor (which can be very satisfying).
- Write in project owners. I have done this as the last step of the exercise: Go through each project that has made the cut and assign an owner.
It is also a good idea to have blank slips available for projects that come up that weren't on the original list. And it may be helpful to give each participant a printout of the project listing on the first tab.
Whether you take the high-tech or low-tech route, the goal is the same: Establish a clear set of priorities and achieve buy-in from all of the participants.
This tool is easy to customize. The Computations tab provides mechanisms for the following:
- Change the Cost, Benefit, or Risk Factors. For instance, if you want to change Operational Cost to Management Cost, just change the factor name here. It will update the other tabs and formulas.
- Similarly, you can change how each factor is weighted by adjusting the Weighting value.
- The Shelf-Life grid multiplies the benefit by a factor based on whether the shelf life is short, medium, or long term. You can adjust these multipliers.
- By default, the tool doubles the risk of a project with no owner. You can change this to 1.0 if you don't want this factor to affect the risk. (This is a good idea if the owners are going to be assigned as part of the exercise.)
- Finally, there is a field for the Maximum Number of Projects. The macro uses this to generate the graph. If you add more rows because you have more than 50 projects, update this value so the macro will incorporate the whole list. Just bear in mind that unless you happen to have projects that are evenly spaced, the graph will get crowded and hard to read.
A note on the macro
The tool uses a macro to generate the chart according to how Bubble Charts are defined in Excel. Each bubble is a unique series which, if done manually, needs to be entered one at a time. The macro creates a series entry for each project on the list and does some formatting.