For company leaders to approve proposals submitted by IT departments, it is necessary to accurately predict the costs and benefits of IT proposals, which is an important capability of the CIO.
Jay Rollins is Deputy General Manager of IT at Churchill Downs Ltd. He wants to control unnecessary expenses. He wants the company to win big and get better prices and services from sellers; he also wants to clearly articulate technical items How it helps the company achieve its strategic goals. Therefore, Rollins requires that a business plan must be developed for all IT reporting projects. Such regulations would help companies better analyze risk, predict success and monitor managerial responsibilities, he said, and allow for more optimized business activities. "
Today, IT and business general managers are often required to develop business plans to justify technical proposals, and many companies are making business plan specifications part of their standard operating procedures. "IT is expensive, so if you're going to use it rationally, you have to have a plan," said Hummel, CIO and senior vice president of Sutter Health. The health center is a non-profit organization with 65 health care facilities.
Developing such a formal analysis report is not an easy task, especially for department managers who are busy with their day-to-day tasks. "It's very difficult to make a good business plan," said Kowalsky, CIO and senior vice president of Pittsburgh-based education management company. The company is one of the largest private schools offering higher education in the United States. It takes time and resources, a solid understanding of the technology and how to plan the program, and a clear understanding of how the project fits in with the other strengths of the business, he said.
The following 7 steps will help CIOs efficiently craft a great IT project proposal.
1. Understand business goals
IT leaders say a good business plan predicts costs and savings, details expected benefits and risks, and clearly shows how the proposed project aligns with the company's strategy. Says CIO Maxson of Merrimack College: "You should be clear: How can information technology improve business performance? And what support does it provide to the core goals of the business?"
Hummel said his technology proposal had to go through a rigorous approval process before it could begin. After all, they're competing for funding with projects like buying hospital beds, CAT scanners, and so on, so it's important to articulate how this technical project will improve patient care. "You have to create a business case that other managers can understand," he explained. This is very important because his plan is to be approved at an executive committee meeting. At this meeting, the CEO, Chief Physician, and District Executive Officers collectively decide whether or not to approve the application.
2. Let the numbers speak
Start with a number and include project expenses, overheads, and predictable returns and investments, says Wettemann, vice president of consulting at Nucleus Consulting. The company provides consulting and investigation services in IT.
3. Focus on ROI
Many business scenarios speak inaccurately about ROI, Wettemann recommends collecting the best cost and benefit data possible, and understanding the accuracy and variability of that data. Judith Spitz is Senior Vice President of Network Systems at Verizon Communications, Inc. In New York, she says, she works on developing a business case that illustrates the process for executing a specific project and saves money by doing so. As an example, she cites a business case for a voice system, where she succeeded in calculating ROI by calculating the reduction in the number of calls handled by customer service representatives.
But experts say the benefits of many projects are not so easy to quantify. For example, in a CRM system, how does a company accurately calculate the increase in sales due to increased customer satisfaction? In this case, Wettemann said, it's important to make an appropriate estimate.
4. Pay attention to corporate culture
Corporate culture determines what should be written into the business plan, how many details need to be included, how long to write, by whom, in what form, and when to submit the plan. Some companies only need a few pages of summaries of costs, rewards, risks and benefits. Others want detailed reports and supporting documents, plus oral presentations. Even within the same company, different kinds of projects may require different business scenarios. Jennmar provides ground control technology for the mining and tunneling industries. Ted Benham is the company's deputy general manager of IT. When the IT department needed to upgrade the company's ERP system, he submitted a very detailed business plan, not only explaining the financial information, and also outlines possible mistakes in day-to-day operations.
5. Describe non-profit benefits
Financial benefits are important, but experts say IT managers must not ignore non-economic benefits. In fact, some important proposals do not yield economic benefits. Even if the potential benefits cannot be quantified, leaders should use the same rules to describe those future visions. “The more advanced and innovative the company understands, the more about 80% of projects are driven by economic benefits, while the other 20% are driven by strategic advancements that can be important to the company,” Georgia Tech "You have to look beyond the numbers and see what the numbers don't say," said CIO Cummins of the School of Management.
Merrimack University, for example, is installing wireless systems, console PCs and multimedia equipment to create an excellent classroom environment. These projects require a one-time investment and some long-term spending, but the business case shows that these technologies will help the university remain competitive in the long term.
6. Write down indirect expenses
A good business plan needs to specify one-time investment and long-term expenditure, as well as foreseeable risks and benefits. However, experts say managers should also address important relevant factors. For example, they detail how to train workers and advance the application of new technologies and processes. In addition, they should be precise and objective in giving the pre-investment amount, which is often overlooked or underestimated.
7. Consult your business partner
When drafting business plans, successful IT managers turn to other department managers. "The most successful cases are the result of team effort," Wettemann said. The business case needs to clearly explain the business value of each proposal. They need to explain how this aligns with overall company-wide and departmental goals. And they need to demonstrate how the new upgraded system is actually boosting the company's business.
Managers at Novell Ltd know this well, says Debra Anderson, CIO. He works with managers in other departments to develop an annual business plan and plan projects over a three-year period. "It's a great way to connect IT with the company as a whole," he says. And the process encourages company leadership to prioritize IT's proposals among individual departmental proposals.