Abstract Information Technology (IT) Projects will play a vital role in organizations and will become more critical this 21st century. A strategic direction and a corporate bottom-line can help create a good relationship between the IT projects and the organization’s objectives. Using the Project Portfolio Management (PPM) can help us identify and invest only in those projects that have a high success potential for the organization. Criteria are identified for the evaluation of the factors to be considered for the prioritization of the IT project.
A scoring/rating for evaluation is also presented. PRIORITIZING THE IT PROJECT PORTFOLIO Most organizations have a so many factors to consider when prioritizing IT projects. In reality, IT projects are more often funded for the sole purpose of their perceived merits or their project owner’s interests. The organizational leaders begin with the IT strategy rather than the goals of the business. Little rigor is involved in the prioritization and the overall ranking of it is subjective.
So, the Project Portfolio Management (PPM), a powerful tool that focuses on the selection and management of a set of projects to meet specific business objectives, shall be used. It is designated to assure the prioritization of IT projects. To make the IT projects able to compete for the prioritization with all the other initiatives or projects of the company, they must undergo the same process with such amount of rigor and business justification as the other investments. Also, the strategic value and alignment with the corporate objectives must be clearly recognized.
Through this, IT project requests can get funding, resources and commitments. In order to begin the evaluation, it is important to carefully review the strategic objectives of the organization. This can be achieved through reviewing existing information, such as the strategic plan. A systematic, rational approach for selecting and prioritizing IT projects based upon the corporate objectives is necessary. It must establish the business case and should be serving for the key drivers for the organization. So now, the IT projects can be evaluated through these criteria: Will the project able to drive or create more revenue for the corporation? • Will the project be able to cut the cost of doing business? • Is the project mandated by federal, state, county, or local laws or executive orders? • Are there competitors in business who has already undertaken the project? Information technology projects use a model called Credit Union Return on Technology Model or the CURT model. This model is designed to prioritize the information technology projects within the organization’s IT portfolio. The CURT model is represented by this equation: pic] The higher the CURT number, the higher is the overall return of that project for the company. The term “return” in the “credit union return” does not only determine the typical monetary return, but it also describes the positive impact of the three areas mentioned: Financial, Strategic, and Resourcefulness. Through this financial factor, we can evaluate the first among the mentioned criteria, “Will the project able to drive or create more revenue for the corporation? ” The evaluation of this is very critical because it is one of the key drivers of the organization.
The numerator of the equation has two parts: the Finance portion and the Strategic portion. The Financial portion is the Internal Rate of Return (IRR) minus a certain discount rate. IRR can be calculated by its standard formula that is widely used in accounting. ROI, PV, NPV, etc. can also be used depending on the area of interest. As the financial factor increases, the potential for higher revenue also increases. To assess whether which IT project can help cut the costs of doing business, the strategic factor and the resource factor of the CURT equation are the measure.
The Strategic portion of the equation is composed of Emphasis and Payback. The three possible emphases that all credit union information technology projects can have are member service, infrastructure, and internal efficiencies. The strategic factor will remain high if the emphasis is high and the payback period is quick. That is the reason why most senior managements would rather implement projects with the correct emphasis that quickly reimburses the investment. Meanwhile, the denominator of the CURT equation covers the resource factor. The resource factor is time multiplied by labor.
Time is the measurement of how many actual working weeks it will take to complete the subject and labor is the quantity of the full-time equivalent technology staff to complete the project. When more time is actually needed for the project, the CURT number decreases. As the number of staff allocated for the tasks in the project increases, the lower the overall returns for the organization. Even though we can measure the Financial, Strategic and Resource factors through the CURT equation, the number that represent these are just a numbers.
Surveys can best supplement the evaluation. These surveys will be dispensed in appropriate sampling procedures. Financial metrics have direct impact to the organization, but there are other criteria that should be included and are not often easily measured. For the fourth and fifth factors in the evaluation criteria, there is no need for an equation to measure the viability of the project. Research if the project is mandated by federal, state, county, or local laws or executive orders.
If the project is supported by the mandate of these, know the limits of what the law can just permit. If the law on implementing the IT project portfolio will demand anything that will sacrifice or affect majorly the key drivers of the organization, it is better reserve the prioritization on this project some other time. This evaluation factor can be assessed through a rating system. It can be a 1-5 scale, 1 represents that the support of the law on the category of IT project portfolios is Very Beneficial for the company, and 5 represents Very Negative in effect.
The fifth in the criteria is determining whether the other competitors in business have already undertaken the project or not. This evaluation factor will help the organization visualize the scenario when the IT project has already implemented and what mistakes should be avoided through studying the competitors. A flowchart or a diagram can be drawn for every competitor company who already implemented their own IT project and the positive and negative effects of which. With this, you can narrow down your choices on which IT project to implement.
Conclusion The direct relationship formulated between the IT projects will help identify, justify, and invest only on those projects that have high success potential. A systematic, rational and proven approach such as the Project Portfolio Management can facilitate better and cost-competitive decisions. The evaluation of the key drivers of the organization will help determine which IT projects deserve to be priority. References Miller, Bruce. () Portfolio Management: Linking Corporate Strategy to Project Priority and Selection. A paper presented on Sept. 0, 1997 at PMI Symposium, Chicago, Illinois. Retrieved 22 May 2010 from PM Solutions http://www. pmsolutions. com Denbo, Adam D. and Rand W. Guthrie. () Prioritizing IT Projects: An Empirical Application of an IT Investment Model. A research paper from California State Polytechnic University. Retrieved 22May 2010 from http://www. iima. org/CIIMA/CIIMA%20V3%20N210%20Denbo. pdf Machavarapu, Sai. Prioritizing IT Projects Based on Business Strategy. Retrieved 22 May 2010 from a web-published article posted July 15, 2006 at http://www. cio. com/article/print/22976