INFORMATION ECONOMICS (IE)
"What's important is getting the senior people to agree on what's important to the business."
Nuts and Bolts: Information Economics aims to provide a neutral method of evaluating a portfolio of projects and allocating resources where they will be of greatest benefit. The idea is to force IT and business managers to articulate, agree on and rank priorities, and draw more objective conclusions about the strategic business worth of individual projects.
"The value of IT will be improved over time if you invest in high-value projects. The underlying philosophy is to spend your money where it's going to make the most impact," says Tom Bugnitz, president of The Beta Group, the consultancy that champions Information Economics.
Both IT and business managers first list 10 decision factors and evaluate each for its relative importance (positive) or risk (negative) to the business. Each line of business has different decision factors that can be added, deleted or changed as priorities change. Next, IT projects are evaluated against those decision factors. The result is a total relative value number for each project in IT's portfolio. With a master list of projects ranked by score, it's simple to determine which should be continued and which should be killed.
Lafarge Canada, a construction materials company in Montreal, had a good track record for IT project starts, but decisions were based more on the power of the business sponsor than on sound strategic principles, says Michel Therrien, director of IT planning and e-business. "Now we can argue around specific definitions. Each of our imperatives is mapped to [our] goal."
Word of Mouth: IE is a relatively fast way to prioritise spending and align IT projects with business goals. Its risk analysis is fairly detailed, if still subjective. This isn't designed to manage projects, and it won't unless IS and business managers are willing to participate and to possibly revamp current planning models to accommodate the process.
Time and Money: Six to eight weeks; plus or minus $75,000.
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