Driving IT Projects with a System

September 20, 2006 by admin

Leaders of IT departments know the situation all too well. They’re supposed to listen to their gut when making important decisions instead of basing decisions on hard and fast facts and numbers. Many departments usually only selectively implement a comprehensive approach to driving and coordinating IT projects. And that happens even though the costs and benefits of IT are becoming more and more of an issue. Help is available in the form of a precise key figure system that shows the areas in which a company must still improve performance. The numbers reflect the contribution of IT to planning, control, and direction – and ultimately to the success of the company.

A Number Instead of a Gut Check

At one Glance

At one Glance

In general, individual key figures have only a limited power of expression either by themselves or in terms or the profitability, productivity, or liquidity of a company. A key figure system, however, combines isolated data into a structured collection of data records that depend upon each other or that supplement each other. This approach can prevent erroneous interpretations from the very start and capture the mutual effects between the numbers. For example, the greater the portion of processes that can be handled with standard software, the higher the profitability or the ROI of the related IT projects. Many individual applications lessen profitability in terms of ROI.
However, it takes a great deal of work to create and maintain a key figure system, especially because it can’t simply be developed and implemented on the side. That’s why every company should be clear about what’s involved before it decides to control its IT in this manner. A clearly structured implementation is vitally important. It must be seamlessly organized and have tight deadlines.

Phase 1: Define Goals and Analyze Potentials

The Context

The Context

The project team – made up of future users and experts from IT controlling – must first align IT goals with company goals, derive the tasks for the project from that alignment, and then pack the tasks into key figures. For example, if the company makes cost leadership a policy, IT would be controlled by the average operating cost per user or the length of amortization for a new investment. It’s primarily important that the project team serve as a broker between upper management (which defines the company goals) and those responsible for IT so that it can guarantee that company goals are being correctly translated into IT goals. The team states where efficient control offers the greatest potential in IT:

  • Infrastructure
  • Organizational structure
  • Processes involving new application software, including implementation, maintenance, and service
  • Upgrades

If the team believes it can shorten process times or increase process flexibility, it should try to capture the available potential by controlling these processes with a key figure system.
A matrix of potentials can display the performance possibilities of IT systems. Using the matrix, the project team evaluates the potential of each individual application on a scale of 1 to 10. The matrix compares the previously defined goals, such as the ability of standard software to support 80% of processes or a monthly rate of fewer than 2 error messages for every group of 10 users, with the potential of the software applications. The matrix displays which IT systems would have a positive effect on the company if they were controlled by key figures. Effective control of IT projects can enable a company to increase its profitability, but a well-controlled IT organization does not necessarily guarantee high profitability. In general, it’s much more simple to first control a few IT systems with key figures than it is to convert the entire IT department to controlling with key figures.
In the next step, the project team determines all users who operate with various key figures and analyzes what information is required for specific work. A project manager, for example, is primarily interested in the progress of a project and its ability to meet deadlines. The person responsible for a cost center is primarily interested in keeping the project on budget. For its part, IT management is concerned with satisfying internal customers and its own employees. Program controllers must know which key figures offer information on the status of an application. They know, for example, that the key figure of “capital value of an application” reduces the difference between incoming and outgoing payments. The value is less than zero when the budget has been exceeded and the project was not worthwhile financially.

Phase 2: Getting the Number in Shape

Parameters

Parameters

Key figure systems can be set up and compared more easily when the numbers are determined in the same way. Accordingly, a company selects the key figures relevant to it from a set of appropriate and relevant actual key figures. Independent of the goals of the company, the uniform numbers are then adjusted to the individual situation of the systems to be controlled and divided into various categories.
The project creates a set of characteristics from each key figure – parameters that set the target and desired values, the methods used, how measurements are taken, and who is responsible. It must also set the parameters for the key figure system itself. That includes a description of the system, the controlling task that it performs, and the type of support it offers for analysis.

Phase 3: Bringing the System to Life

Ongoing Operation

Ongoing Operation

As part of the implementation, it’s important how often and for whom the key figures are to be worked through as a report. Another issue is the time and date at which the data is collected. During planning, the key figure system must also be scrutinized at regular intervals and adjusted to company goals if necessary. Even spontaneous adaptations should not be forgotten. Ongoing operation is thus a cycle of collecting data, analyzing data, defining measures, and continuously reworking the key figure system.

Phase 4: Always Up-To-Date

Constant updates make the key figure system functional and alive in the real world. The key figure team should use regular suggestions for improvement or evaluations from users to adjust the system flexibly to a situation in constant flux. Depending on need, it can add new key figures and remove others that are no longer useful to avoid erroneous interpretations. The team can also change the parameters of existing key figures.

Martin Betz

Martin Betz

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