Tag Archives: justifying it projects

5 key components in getting IT projects approved

IT managers and CIOs can struggle when it comes to getting their projects approved. It’s usually because they lack one or more of the key pieces you need to get an IT project approved and funded.

Think of this scenario for just a moment:
The CEO of a small company sees his CIO walking down the hall and toward his office to talk with him. The CEO quite often wants to find a way out of the room to avoid having this conversation.

Why?

Because he knows two things are going to occur in this meeting with his CIO:

  1. He’s not going to understand what the CIO will be talking about because he always discusses things in technology terms and jargon.
  2. The CIO is going to ask him for money to fund a project.

If the CEO doesn’t understand what the CIO is saying, it’s hard for him to give his CIO the money.

You might be surprised, but this scenario happens quite often, especially in small and mid-sized companies.

It’s important to know what a CEO is looking for. Above all, the CEO looks for the “why”. What are the benefits in doing this project and what will it do for our company… WHY?

I believe there are five key components in the dynamics of getting any IT project approved.

1.  The project must address a legitimate business need or issue.

All project recommendations you make should be business-driven, plus there should be a business sponsor identified for each recommendation.

This business sponsor can come from the CIO, but most of the time it should be someone from the business operations of your company.

The project should eliminate or minimize a risk, achieve an opportunity, or address a material issue of the business.

The bottom line is that all IT projects need to help the business in some way, and it always helps when you identify IT projects that originate from a legitimate business need.

Projects that are business-driven always have an edge in getting approved.

2.  The project should deliver business value.

I identify “business value” as one of five specific things. A project should:

  1. Increase revenue,
  2. Decrease cost,
  3. Improve productivity,
  4. Differentiate the company, or
  5. Improve client satisfaction.

Learn more about this in my blog post, “Business value is key to IT success.”

3.  All projects must be cost-justified.

The benefits of doing a project should outweigh the cost and effort. In other words, there needs to be real benefit to the company to invest time and money into doing something.

If you can’t justify the cost of a project to senior management, odds are high you won’t get the approval you seek.

Cost justification can come in many forms, not just financial cost justification. Consider project justification in areas that:

  • Reduce risk,
  • Improve client satisfaction,
  • Improve employee satisfaction,
  • Reduce downtime,
  • Address regulatory or compliance requirements.

4.  The project must be in context with the company’s current situation.

You may have a project that addresses a high-risk issue and is easily cost-justified, but if there is no money available, senior management may not be able to approve the project right now.

They may choose to take the risk. Senior managers balance risk and business issues all the time, plus there are many other departments in the company that need funds to address their initiatives and needs.

If cash flow is tight, the best project to recommend might be a less important project  that creates a cash flow benefit or cost savings that helps your company afford to sign up for your primary project later.

5.  IT must have a proven track record.

Senior management won’t hear much of what you have to say if you lack credibility. The way to achieve credibility is by delivering projects successfully and doing what you say you will do.

Simply put, you have to establish credibility by delivering projects successfully once they are approved. This creates trust and a sense of predictability that will help you in efforts to get projects approved.

Summary

You want to turn the scenario I talked about at the beginning of this article from one where the CEO is looking to avoid having a discussion with his CIO to a situation where he wants to walk out and greet him because he knows the CIO is bringing him something worthwhile.

The CEO wants to hear his CIO when he is consistent in:

  • Making business-driven recommendations,
  • Recommending projects that address a business issue or need,
  • Recommending projects that deliver tangible business value,
  • Always providing prudent cost justification,
  • Delivering the goods once projects are approved.

This is how CIOs and IT managers become partners with the executive management team.

I hope this insight helps you get your next project approved.

Best of success.

Note: This article first appeared in my Practical Management Tips for IT Leaders BLOG on CIO.com.

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IT managers can put a cost on anything

One of the difficulties we have as IT managers is in communicating with business managers.

–  We are technical, , ,  they are not.
–  We speak in technical terms, , , they do not.
–  We understand the technology, , , they do not.
–  They discuss things in financial terms, , , we do not.
–  They understand their business, , , we do not.

It’s material for a big gap to develop and prevent us from getting on the same page with our client.

One of the things we can do is learn to discuss things in financial terms. Are you aware, it’s possible for you to put a cost on virtually anything? Well you can, , , and you need to. Here’s why.

Business managers speak in financial terms, , , especially senior managers like your CEO and CFO. They mentally convert most things they hear into either business value, business cost, or business risk. All three of these have financial implications.

Let’s look at typical examples:

  1. Cost of downtime  –  Downtime is certainly a risk and a cost to your company. Are you aware you can literally identify the cost impact of a printer going down, a router failing, or a server crashing? Need to upgrade your infrastructure? Conveying your strategy in “cost of downtime” can be a big help when you discuss this with your senior manager. CLICK HERE to learn how easy this is and use a tool I developed for this purpose.
  2. Cost of losing a client  –  Here, I’m talking about your company losing a paying client, , , someone who buys your company’s products or services. Any good marketing or sales manager can tell you what losing a client is worth, , , in financial terms. If you have an IT initiative targeted to help your internal marketing or sales client improve client satisfaction, , , they should be able to help you identify what your work value will be in helping “keep clients”. It’s always cheaper to keep a client than to lose one and have to replace him.
  3. Business opportunities – Projects that help the company sell more widgets or services, , , or add clients have a definite financial value. Your marketing and sales teams always forecasts future sales, , , seek their help in identifying worthwhile projects that help them succeed and in outlining the opportunity value your IT project work adds to the mix.
  4. Cost avoidance  –  Doing a project now can avoid costs down the road. Don’t forget to include this aspect when looking at the financial value of your project.
  5. Productivity savings  –  Improving productivity of the company’s workforce can be a big financial value. Improved productivity lets a department do more work without hiring more staff or the ability to reduce staff to do the same amount of work. The department managers and their bosses can help you determine the financial value of improving productivity. For example, in one company every time we developed a data interface from a hospital system into our systems we knew it would be the equivalent of one full-time equivalent (FTE). As a result, our operations people wanted as many interfaces programmed as possible because it eliminated clerical workers having to key in data and handle paper, , ,  big help in improving their financial position. Identifying the financial value in this case is simply the cost of a clerical worker in salary and benefits.

Talk in financial terms and business managers hear you, , , speak in technical terms and use all the acronyms we like to throw around in the IT world and they not only do not hear you, , , they don’t want to meet with you because they simply can’t understand what you are saying.

Make your discussions conversational and put things into financial perspectives and see what a difference it makes with senior managers.