Using the 80/20 resource rule to help justify strategic IT projects

A challenge for some CIOs is securing funding for strategic IT projects if they have to lobby for this funding against profit-generating or customer-facing projects from other functional areas.

Selling such projects based on risk mitigation or operating cost control might sometimes work, but the first assumes that the costs of the project is outweighed by the expected cost of risk realization while the second might result in the CIO’s feet being “held to the fire”.

A different spin on justifying some IT projects might be to evaluate whether they address the common issue of 80% of IT resources being dedicated to maintaining the base asset (a.k.a. “keeping the lights running”).  If the majority of potential project resources are diverted towards operational or tactical initiatives, this reduces the number of strategic projects that require IT resources.  And as most modern business transformational projects have some reliance on technology, this can result in  competitive disadvantage.

Based on this, one approach to justify expenditures on certain IT projects might be to emphasize increasing (potential) availability of IT resources for strategic work.  A baseline can be derived if your department is doing time capture – calculate utilization over a three to six month period for two standard “buckets” of work: operations or tactical work that maintains existing service levels and strategic project work.

Reducing operational resource burden by upgrading or replacing a critical system might entail a one time “hit” to fund the systems replacement project but will provide an increase in sustained resource availability towards strategic work.  This is not a “smoke & mirrors” sell – assuming utilization metrics can be calculated, it should be possible to objectively assess whether expected benefits were realized or not.

Demonstrating how a greater percentage of transformational projects could be delivered by investments in strategic IT projects is another progressive tools towards improving the IT engagement model with the rest of the business.

Categories: IT Governance, IT Operations, Project Portfolio Management | Tags: , , , , | Leave a comment

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