We must have a universal method for calculating value to eradicate money-wasting projects
The bitter experience of ill-conceived projects has left its mark on the Naked CIO, who argues we must have a universally applied method for calculating project benefits.
One of my biggest frustrations as a CIO is indecisive people who cannot articulate the business value of their requests. Ironically enough, they usually hail from the accounting or finance divisions. You would think that, of all organisational departments, they should realise the need for cost justification more than anyone.
For years we have been subservient to the bean-counters for spending capital that has to be justified in triplicate - except, of course, when they want something.
With marketing it is slightly different. They are very keen to articulate benefit in very specific ways. The only issue here is that when the benefits don't come, they are masters of deflection. Someone else is always to blame. Typical Animal Farm mentality - everyone is equal but some are more equal than others.
Differing departmental attitudes
This attitude is in stark contrast to my whimsical IT colleagues, who never claim to be equal. In many circumstances the elitism of IT professionals is rather comical, to say the least. A department that is held in the lowest esteem in most organisations sees itself as above others.
It sometimes makes me wonder if this paradox of epic proportions isn't part of the problem. Certainly, I think it has some bearing on why, according to a recent poll I read, IT is the department that employees would least like to have sitting with them at a company celebration.
With all those different departmental approaches, the fundamental challenge is to create a universal and common language that can articulate effectively the residual business benefit of development and other IT initiatives.
Recently, I was made aware of an 'urgent' project that had just been completed and ended up saving all of two hours of labour productivity per month.
I lost it, I went around looking for someone's, anyone's backside to kick. Clearly, before the project was started no one had been able to quantify the effort involved against the residual value of what was produced. The inevitable upshot was a complete waste of precious resource.
Of course, not all projects can be articulated in terms of return on investment, productivity savings or cost reduction. But surely there has to be some way to subject a request to an acid test that ensures the effort to produce is less than the resulting value.
Incremental business value
More and more I am trying to measure this type of activity to demonstrate the incremental business value of development resources in the form of a number and metric that the business can understand and which can be consistently measured.
In many cases we can conduct this exercise. But without a universally applied method I can only measure on a per-project basis, rather than against my total development resource spend, which is what I would like to do.
Essentially, I would like to be able to justify these resources by saying that over the course of the year the return on investment was 300 per cent or three times the cost of my development staff.
Not only is it difficult to create a universally applied benefit method but also there are, as I mentioned earlier, significant differences in how departments articulate benefit and what they use to justify this either indirect or direct financial benefit.
Unusually, I don't have a ready-made solution in mind. But I hope that perhaps you could comment on what, in your experience, works and what does not. Perhaps you can tell me whether you have attempted similar exercises or at least been part of them.