IT managers have become adept at cost-cutting during economic downturns, but initiatives for corporate expansion require a very different set of skills
Organisations are again starting to make major investments in improving performance and profitability - but do you know how best to manage a portfolio of such initiatives? If you don't, there is a danger that your precious investment capital may not be used as effectively as it should be. Become a master of managing a portfolio of difficult projects, and watch your profits and revenue start to surge,
Within this context, IT directors are faced with a challenge of ramping up their delivery capability after a period of minimal change. Although more money may be available to support the growth in capability, there is a limit to the speed with which that capability can be increased. The key constraints in meeting the increasing demands of the business are more likely to be the resources available and the knowledge of existing systems.
How can an IT director be seen to add real value to the initiatives the business customers want to progress with limited resources?
Everyone knows the damaging effect an economic downturn can have on the revenue and turnover of an enterprising and growth-hungry corporation. Less widely recognised is another serious consequence of a recessionary environment: that the subtle skills and knowledge needed during prosperous times tend to erode, be half-forgotten or vanish entirely when a downturn arrives.
A typical casualty of a recessionary climate will be the skills associated with executing investments a business needs to make to march firmly and decisively towards its goal of excelling in its market. These investments - typically termed "discretionary" - are likely to be suspended during a recession, when organisations may prefer to minimise anything but expenditure that they regard as essential to comply with regulation or stay in business.
For an IT department this could include staff training and tweaking system design to improve customer service.
But as times get better and the skills to initiate and manage discretionary investments are needed once more, the people who have these skills may no longer be working for the organisation or may need to re-learn what they have forgotten or failed to keep up-to-date.
Because so much is at stake, an organisation needs to prioritise, plan, resource, manage and execute its portfolio of discretionary initiatives in the most efficient and cost-effective way it can. In today's business climate, a large corporate may easily have more than 100 discretionary initiatives proceeding at any one time.
Managing such a portfolio of discretionary initiatives is not a new science. There are also some useful computer-based tools available to support the management of such a portfolio. But the real challenges are more fundamental: how do you decide which initiatives you want to advance in the first place and how do you manage them as they progress?
The following five key steps ensure you deploy your resources for these discretionary initiatives with maximum efficiency.
Step 1: Determine the demand
You need to establish the precise nature of the demand for discretionary change initiatives throughout your organisation.
This means establishing a comprehensive list of the specific initiatives people are demanding at your organisation. The sources of demand will usually stem from: the need to carry out your current business strategy; projects already in progress; continuous improvement initiatives; legal or regulatory changes; urgent business requirements and maintaining existing structural platforms, ie necessary software and hardware upgrades.
Careful analysis of these sources of demand is essential. They all need to be identified and gathered together so you can have a complete view of the extent of demand for discretionary change initiatives at your organisation.
Step 2: Can you change?
You must establish the precise nature of your organisation's ability to supply discretionary change initiatives.
Here, you are basically investigating your organisation's capacity for change, both at a practical and strategic level.
At a practical level you must of course consider the availability of financial resources as well as other resources such as management expertise, technical expertise and computer systems.
At a strategic level, you need to look at the sourcing issue in light of your organisation's particular business model. For example, the extent to which your organisation uses outsourcing or offshore suppliers will be central to your planning. It is also necessary to identify any bottlenecks within your organisation that are likely to constrain supply. If these cannot be eliminated, it will be necessary to assess what their implications will be.
Step 3: Take control
Having determined the demand and the company's ability to meet it, you need to drive into action the right change initiatives for your organisation.
This means taking control of the entire portfolio of change initiatives and managing the process to ensure that those initiatives you have decided to pursue as an organisation are properly pursued and receive the attention and resources they deserve.
It is critical for IT management to be directly involved in determining an organisation's portfolio. IT needs to be strongly engaged to prevent commitment to an unrealistic level of IT change that will lead to project failure and loss of IT credibility.
Remember that it is possible that you will need to shut down projects that are no longer considered a priority. It is likely that some people who were involved with the projects in the past will continue to seek to progress them, even if it has been decided that this will not happen. If this situation arises you must deal with it.
You should also phase in initiatives in an appropriate fashion so they do not eat up resources. This creates bottlenecks that slow progress.
Step 4: Keep on top of things
Keep on top of your chosen initiatives and make sure they remain aligned with your overall business strategy. Don't allow your control to waver, or "rogue" projects to be given resources and attention.
Instead, focus on the projects that have been chosen to take your business strategy forward. If opportunities arise for initiatives that might be seen as playing a key role in advancing that business strategy, you will need to consider the merits of each opportunity on a case-by-case basis and re-assess your priorities across the portfolio.
Step 5: Review and monitor
You need to review and monitor progress on a regular basis: typically a monthly review of progress with more substantial quarterly assessments. In particular, you need to have a progress review when some event happens that may move the goalposts, affecting the demand for initiatives at your organisation, or its ability to supply change.
For example, the hiring of a new team of people may have an important effect on both demand and supply - so such a hiring may need to be reflected in how you adjust your priorities. Similarly, if your organisation concludes an outsourcing deal, this is going to have a major impact on supply.
By following this five-point plan, an organisation can ensure it is in touch with everything it is doing, or should be doing, to advance crucial changes across all the areas of its business.
Margaret Hassall is head of the finance practice at business and IT consultancy Charteris
This was first published in October 2004