Even as companies begin to loosen their stranglehold on funds, some IT groups are stilling feeling the hurt when it comes to getting their projects approved. But a mixture of understandable metrics, a compelling business case, and old fashioned honesty just might win the day.
“Basically, you need three things in the world of IT,” says George A. Douty II, information technology manager at Houston-based Dean and Draper Insurance Agency. “Hardware, software, and manpower.”
He says that each requires its own type of justification within a project, and each carries a different potential impact on an organization. Hardware replacement and upgrade initiatives are often based on lifecycle analyses, while software requests are more closely tied to an organization’s specific needs. And though staffing may be critical to the success of your project, Douty says it could be “the most difficult to justify and get approved.”
One tool he believes can give IT an edge when it comes to building a business case for headcount is external benchmarking. “Industry standards are helpful in justifying additional manpower,” Douty explains, “as well as workload capacity and utilization records.”
Convincing your company’s decision makers that your project is worth the investment often means proving its value in financial terms as well as things that go beyond dollars and cents. Ira Sachs, senior technical director at Dynamics Research Corporation’s High Performance Technology Group in Andover, Mass., and author of Performance Driven IT Management, says that issues such as quality and reliability improvements, avoidance of risk, and increased agility shouldn’t be undervalued. “Technology enables business results,” he explains. “In all cases, I think the metrics should focus on better, faster, cheaper.” Business agility is a primary concern for many organizations, and Sachs encourages IT managers to highlight capabilities that go beyond what the company can accomplish today.
The key performance indicators (KPIs) most interesting to executive teams may not be the same ones IT has been gathering, says Shafique Pappa, CIO/CTO at CHR Solutions, Inc., in Houston.
“A typical KPI that almost every C-level should be concerned about is the organization’s spend per employee as a total, and then how much is spent on network versus applications versus support.”
He suggests technology managers include relevant benchmarking data in their fund request packages, so decision makers can compare the company’s spending numbers to industry norms. It’s also a good idea, he says, for departments to focus on KPIs related to incremental IT spending data, as well as “what benefits they’re creating for the organization in either productivity gains or reducing other hard costs.”
While every stakeholder is looking for business results from each of the company’s projects, Sachs believes IT is more focused on the day-to-day details than C-level decision makers are. That disconnect could lead to a return on investment (ROI) equation that isn’t compelling enough to gain executive buy-in.
“IT folks should always try to take themselves out of the details every once in a while, and look at the larger picture,” Sachs says. By running through the cost-benefit analysis from management’s perspective, Sachs believes the IT team will be in a better position to develop a business case that pulls all of the organization’s stakeholders together, and gives each a reason to support the project.
Presenting ROI information is a common practice in every business, but Douty says it’s important to tailor the message in a way your audience can easily interpret and relate to.
“Don’t be technical with non-technical people,” he cautions. “Talk the language of the industry you are in, so they understand where the upside is coming from.” This holds true whether the ROI focuses mainly on dollars or more on other benefits — boosts in productivity, reduction in service interruptions, etc. — and will help tie your company’s specific needs to the project’s objectives. Not sure which benefit to lead with? “Immediate ROI in the form of productivity is your best bet,” Douty says.
Projects that simply save money may be straightforward to present, but oftentimes the cost-benefit relationship is more complex. Pappa says IT should exercise some creativity when examining how the company’s resources and strategic position will be affected in the long run. For example, he says a project might increase costs (something executives are likely to scrutinize), while also contributing to increased revenues.
“If you’re bringing in more dollar revenue based on those costs, then you’ve clearly aligned yourself with a revenue-generating opportunity for the organization,” Pappa explains. Along those lines, initiatives that are aimed at managing risk should be carefully dissected to demonstrate what costs the business might bear if the project doesn’t go forward.
“There are some organizations that IT can directly impact,” Pappa says, pointing to the recent costly data breaches at credit card processing companies as an example. “If they don’t spend the dollars and they don’t manage their risks, they can put the whole organization in jeopardy.”
When putting together your project’s business case, being proactive and candid could turn out to be your best tools, says Douty. “Waiting until you are in dire need of something is going to cost you a lot more than doing it while your current situation is sustainable,” he says.
But instead of presenting your case as a do-or-die scenario, he believes IT managers are likely to get more support when they give their management team realistic options and information. “Don’t be the IT person that says the organization is going to come to a crashing halt if the project is not funded,” he warns. “Gain the respect and trust of the executives by being honest and realistic about the consequences.”