Effective business cases are presented with a beady eye on costs, benefits and outcomes, says Gartner analyst José Ruggero.
Ruggero, vice-president of executive programmes at Gartner Australasia, presented a session at the CIO magazine conference in Auckland recently on creating effective business cases.
He told an audience of about 85 that many IT projects still fail, and others are never evaluated to see if objectives have been met. A survey a few years ago suggested that 70% of IT projects failed, Ruggero says.
“In the last few months it’s something like 30%. That’s still a hell of a waste of resources.”
IT suffers from “industrial-age thinking”, Ruggero says.
“We’re still seeing IT as an automation tool and an efficiency tool.” IT is also considered a “silver bullet” to solve business problems, he says, leading to business cases that concentrate on cost rather than benefits and promise whatever is needed to get approval.
Businesses often have a better understanding of capital items which have fixed costs and returns and IT departments need to also move to provide accurate budgets and deliver measurable value, he says.
Ruggero lists three areas CIOs should focus on when preparing business cases: governance, fundamentals of a business case and benefits realisation.
Organisations need a clear process of decision making and accountability, he says. “It all starts with governance … The best measure of how effective governance is in an enterprise is how many executives can actually articulate what it is.”
Ruggero suggests portfolio management techniques to help assess IT and non-IT projects when deciding whether to proceed. Costs and benefits should be defined in a uniform format, “so the CEO knows where to find it”.
“Traditional return-on-income is not always the best way to consider IT, but you have to have some way of measuring value,” he says. “My best advice is to use the criteria your CEO uses.”
CIOs should maintain a project repository to help assess costs and benefits, making previous experience a tool for analysis.
“Maintaining that repository is something that takes time, but it’s very important that you have it moving forward,” he says.
IT business cases often overstate benefits in order to get approval, Ruggero says, so CIOs need to clearly state the expected benefits and then check whether they are delivered.
“Some of our business cases are misguided sales documents. There’s no real business imperative,” he says.
Benefits realisation is focused beyond project management, he says. “It’s about going beyond the project to see if the benefits were delivered, with a focus on revenue. “That’s where we need to get to. That’s what we need to do as CIOs.”