Risk and Return

IT managers and team leaders often complain that they are not heard by the business decision-makers and that their vitally important projects are often overlooked in favor of pet projects or niche software that was championed by a sales rep. Business leaders are paid to have a deep understanding of the business and the forces that shape its ability to compete in the marketplace, not necessarily new developments in technology. At the same time, managers are often frustrated by "geeky" IT staff members that want to upgrade every time a new technology comes out and aren't in tune with the business' needs. This difference in perspective can lead to misunderstandings and even worse, missed opportunities.

To bridge this gap, it is important to speak the business manager's language, to approach IT problems in the light of Risk and Return. This means not only outlining the components technical solution, but explaining how the solution supports the strategic vision of the company and the risks, both positive (opportunity) and negative (detriment), that the solution provides. Building the whole picture into the Value Proposition gives the business the data needed to make an educated decision.

Considering ROI

You should always have in mind return on investment (ROI) and time to cost when evaluating whether to engage in a project. Consider the following categories of cost recovery when talking with a business stakeholder:

• Direct Savings/ Revenue Generation – Implementation of the project will directly improve the bottom line and is intimately tied to the core business KPIs
• Loss Prevention – Implementation of the project will eliminate a source of revenue loss or a direct expense
• Hidden Factory – Implementation of the project will eliminate a buried operational process that has become an accepted part of the business (e.g., Once the expense reports are complete, they are printed so the accountants can manually enter them into another system.)
• Operational Efficiency – Streamlining or eliminating a process that allows for the reduction or reallocation of human resource
• System Availability – Systems are more available and able to better support customers increasing either throughput or customer retention
• Core System Function – The project is tied to the core functionality of a system and is key to the successful operation of the system (These include bug fixes, system integration, and functional gaps)
• Opportunity Cost – Provides the capability to react to and capture opportunity. (This one is nebulous and hard to capture. These include: Future-proofing, system abstraction, system flexibility, technology refresh.) Most people will agree that these are vitally important in a discussion, but have a hard time justifying these costs or articulating these to peers unless they can tie the item to one of the above items. These can be stated, but usually not as the only item and are best used in closing discussions

Talking to the Business

It feels like we need an example to really illustrate the difference.

Valueless Proposition

We would like to upgrade our development efforts using the new .Net 3.5 Framework that was just released. This new framework has a lot of new features and is on the cutting edge of Microsoft technologies.

Value Proposition

Our development team is continually building new workflow scenarios to support the changing landscape of our enterprise business processes. While we have realized significant cost savings through the development of reusable, componentized code, we have not been able to reap the same benefits supporting our workflow efforts. Through the use of the Windows Workflow Foundation (WWF) supported in the .Net 3.5 framework, we can speed development, reduce support costs, and build reusable workflow processes into our core applications. This is in line with our organization's standardization on Microsoft development technologies and will eliminate the support and training costs associated with integrating multiple platforms. We recognize that code refactoring will be necessary as we migrate to the new technology, but we propose to align new development with the WWF platform completing the upgrade over a 12-month period. Standardizing on this new platform will eliminate system overlaps, simplify developer skill sets, and provide a single workflow platform to provide nimbleness in the technology to support the evolution of the business processes.

Conclusion

By providing detailed information about IT projects and technologies in language that supports the business shows a strong Value Proposition, you can greatly increase your chances of gaining stakeholder buy in and avoid having your message lost in the noise.