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Tough Decisions

Tough Decisions

IT project selection has many pitfalls. Get it wrong and your IT portfolio can become a nightmare. Here are some warning signs and solutions to help you improve your process

IT project decisions, and the ways they are made, inevitably shape our destiny. Get them right and we boost business success. Get them wrong and we preside over investment disasters.

The reality is that not only are IT selection decisions tough, but so are all management decisions. Paul Nutt, professor of management sciences at Ohio State University's Fisher College of Business, reports in his recent book, Why Decisions Fail: Avoiding the Blunders and Traps That Lead to Debacles, that more than 50 per cent of all management business decisions fail, sometimes in big and inglorious ways.

My own experience suggests that IT investment decision methods fare no better. This is not surprising, since IT projects are often controversial, complex, costly and fraught with unknowns. These challenges frequently foster closed-door, decision team deliberations where too often emotions trump reasoning. Prejudice, bias and ignorance dominate the discourse. Politics rule the day.

Fortunately, this situation is not beyond repair. Warning signs exist that you are not making good decisions. Honestly analysing your own IT project decision process is the first step to fixing what may be wrong.

Warning Signs

Here are some symptoms I often detect, followed by suggestions for remedies. If you find at least one of these signs present, I suggest an immediate "process tune-up". If several of these indicators exist, a downright makeover may be called for.

No self-criticism: Decision-makers frequently won't critique the objectivity and effectiveness of their own IT project selection methods. (Risk: Decision-making flaws continue to do their damage and give employees the message that management doesn't "walk the talk" of continuous improvement process initiatives.)

Poor external communication: IT selection team members don't clearly explain to project stakeholders why individual projects were, or were not, accepted. (Risk: Proposers of losing projects feel alienated, thus festering resistance to funded projects. It also discourages future project submittals, since sponsors find it frustratingly difficult to predict likely success.)

Lack of change: Decision-makers have not visibly changed their IT selection decision process within the past year, regardless of whether "self-critiques" are conducted. (Risk: Decision methods become out-of-step with business climate changes. For example, should risk analysis be more important now than last year? Should different people be involved in the selection process because of business strategy shifts?)

Secrecy is culturally justified: Decision-makers claim that "formalised and open" selection processes are counter to the company's culture. Management, they assert, is highly experienced and has worked well together for years. The implication: Trust us, we know what's best for you. (Risk: Even if good selection decisions are actually being made, suspicion and mistrust are easily nourished among the rank and file who, being in the dark, suspect the worst.)

Intangibles are resisted: Management decrees that only quantifiable benefits count in a project's justification. (Risk: The reality is that all decisions involve intangible factors, whether management admits it or not. Hidden intangibles can mean harder-to-quantify strategic projects are rejected and easier-to-quantify tactical projects are accepted.)

Selection criteria is ambiguous: The criteria for selecting projects is vague. (Risk: Competing projects are not consistently evaluated, thus inviting emotions and politics to carry the day. Project submitters then view the process as a dice roll, leading to indifference during implementation time.)

Comparison methods are inexact: Instead of visibly scoring and ranking the attributes of each proposed IT project, and then comparing the results, management simply talks about its impressions and preferences. At the end of the discussion, selection decisions mysteriously emerge. (Risk: Zero opportunity exists to improve the process, since few footprints exist for later review.)

Solutions

Take heart. Even if you have one or more of the warning signs, there is hope. These problems can be fixed, once management sees the need for change. Here's a three-step method for making it happen.

STEP ONE: Establish the need for improvement. Most busy managers are completely unaware of the traps of decision making. Get the attention of the IT selection team by reviewing any warning signs detected. Cast this review as one component of proactive corporate governance that boards and stakeholders now so earnestly seek. Make the point that decision process transparency breeds trust, not only in financial matters but also in IT selection decisions.

STEP TWO: Strengthen all three components of the selection process. Effective processes have reliable inputs, analyses and outputs. For IT selection methods, this means:

Good inputs - Each proposed project should have a comprehensive, accurate, trustworthy (yet succinct) business case clearly outlining costs, benefits and risks. Submit business cases via standardised templates.

Dependable analyses - Objectively compare projects using standardised decision criteria, focusing on the degree of each project's alignment to the vision, values and goals of the enterprise. Use weighted scoresheets to quantify and compare differences.

Explanatory outputs - Provide sponsors of winning and losing project proposals with written explanations of the team's pro and con assessments leading to the selection decision.

STEP THREE: Finally, proactively garner support for the process. Take time to be sure that the following key stakeholders believe the selection process to be straightforward, accurate and fair: the selection team; senior executives who are not part of the selection team; midlevel managers and operations people (typically the key proposers and implementers of new systems); partners and suppliers impacted by selection decisions; and investors. If enthusiasm is lacking, find out why and fix it. I recall one instance where the simple act of explaining the existing selection process to those outside the decision circle actually converted their suspicions into support.

I hope that making the decision to review your IT project selection process is an easy one for you. Your total investment in this simple critique can be less than 10 per cent of the losses from a single selection mistake. That's not a bad personal ROI for improving your company's IT ROI.

Jack Keen is founder and president of the Deciding Factor (www.decidingfactor.com) and co-author of Making Technology Investments Profitable: ROI Road Map to Better Business Cases

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