To cut or to keep? That is the toughest IT question

IT projects are critical to a company’s ability to grow, drive cost efficiencies and ensure robust corporate compliance. However, significant budget restrictions reflecting the dire state of the economy mean that today’s chief information officer (CIO) faces a harsh reality: financial and other resources just won’t stretch to cover all the projects they would like to do. And, if cuts are inevitable, how can a CIO decide where to wield the knife most effectively?

Traditionally, hit lists have been based on perceived corporate priorities. However, these can be ­ – and indeed have been – ­ influenced by factors such as lack of clarity around the strategic goals of the business; lack of reliable information relating to what certain projects are really expected to deliver; and the force of personality exerted by some key boardroom players to ensure their own pet projects survive, come what may.

In today’s economy, that is both unacceptable and potentially suicidal.

So what is the answer? Enterprise portfolio management (EPM) –­ the practice of aligning the complete portfolio of projects and programmes to an organisation’s strategy. EPM is not new, but it is the most accurate, considered and transparent way of prioritising a portfolio and, as IT leaders ponder the consequences of cutting the wrong project under current cost pressures, it is becoming standard practice, globally, for companies of all sizes.

EPM involves articulating an organisation’s strategy into a collection of well-defined and agreed business drivers. Every project’s contribution to each of these drivers is assessed and then additional constraints such as budget, resourcing and timing are factored in, as are inter-project dependencies. Following detailed analysis, an optimised portfolio can be produced, which should deliver the strategy in the most efficient and effective way.

Decisions based on fact and insight, not personality and prejudice. Surely a better way for CIOs?

Chris Mills is a partner at consultancy PIPC