How to Improve IT Project Success with One Calculation
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nformation Technology projects are some of the most complex and high-profile that you will encounter in your professional life as a finance department team member. Perhaps you have read about the trouble of the new Phoenix payroll system being implemented by the Canadian public service. Maybe you have direct experience with severely compromised IT investments where you work. There is no shortage of examples. So, what can finance do to help? In October of 2016, the Auditor General of British Columbia made some suggestions when they released their report “Getting IT Right: Achieving Value from government information technology investments.” THE REPORT IN 60 SECONDS Regardless of your industry, it is a valuable read for accountants and we recommend reading the full report. In case you don’t have time, here is a quick summary of the major points: • IT is important because “every aspect of government depends on IT.”
WHAT ABOUT “VALUE”? The report uses the word “value” 57 times with no explicit definition. The only comment on how to achieve it is to assess: • alignment of the project with the organization’s specific needs, priorities and strategies • contribution to the organization’s desired outcomes • cost • the level of risk While these are good points, they provide no particular direction to those attempting to assess the possible value of a project or measure the success of a project during implementation or after completion. ROI TO ASSESS VALUE BEFORE & AFTER Perhaps it is just that we believe that numbers are the key to all universal truth (no really, we do), but we argue that finance should calculate the proposed and achieved value for IT projects. The accountant in us is likely very comfortable with Return on Investment (ROI) calculations:
• Only 29% of IT projects globally are rated “successful.” • Success defined as: • On Time • On Budget • AND Value • Success depends on: • People • Planning • Consultation and • Governance The report is an absorbing read, but it fails to elaborate on a significant element: What is “Value” and how do you calculate it?
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This type of calculation should be used to determine the optimal use of your organization’s investment. But our experience is that these calculations are rarely utilized when considering IT solutions, particularly in the public sector. • Why? There are at least two problems with the word “Profit” in the context of Public Sector IT projects. Public Sector organizations typically do not think in terms of profit. • Even if you work outside of the public sector, you may reasonably ask, “How does an ERP system (for example) generate profit for any organization?”
