The Deciding Factor

Tools, Training and Best Practices for

Reducing the Risk of Technology Decisions
Creating a
Project Prioritization Template
A Self-Help Kit
To: Computing Technology Enthusiasts
From: Jack Keen, President, The Deciding Factor Date: July 5, 15
A small bit of computing industry history was created in early 1995 that we would like
to share with you.
Christine Comaford, in her highly popular Mission Critical !C "eek column of
#anuary 9th, offered a !ro$ect !rioriti%ation &emplate to any reader willing to send
their fa' number to her. (ssentially a business management tool, many industry
obser)ers felt such a pro$ect ranking template, dealing with the )alues, bias and
idiosyncrasies of all types of decision*makers, would be not of high interest to
people who were primarily struggling in the pits of technology de)elopment to get
the code out. Christine pro)ed them wrong, by about +,,-. /he recei)ed one of
the largest )olumes of re0uests of any offering she had made in the two year history
of her column.
At Christine1s re0uest, we, the creators of this template, are pleased to pro)ide it to
you. &he files included here are2
Ranking.DOC2 A "ord for "3ndows 4., document 56 pages7 which contain
e'cerpts e'plaining what the template is and how to use it.
Ranking.XLS2 A working ('cel 5., 5"indows7 worksheet containing the
template itself, along with the calculation formulas.
&his template and its documentation is a simplified )ersion of the $ustification and
pro$ect prioriti%ation work that we ha)e done with o)er 65 organi%ations worldwide.
8i)en that recent sur)eys ha)e shown cost*benefit and $ustification related issues to
be one of the top ten concerns of senior management, we hope you will find some
useful ideas for your own en)ironment.
3f you ha)e any 0uestions about the template1s use, or about technology decision*
making in general, please gi)e us a call.
9est regards.............#ack
!./. :or your reference, a softcopy of Christine1s #anuary 9th !C "eek column
Warning: Landmines Await e!"n#l#g$ %rass& is also included on the this diskette.
986 South Shore Drive
Basking Ridge, New Jersey 07920 US
!hone" 908#6$8#%%%% &a'" 908#6$8#$$(0
)nternet" 76*2*+277(,-o./userve+-o.
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Creating a Project Prioritization Template:
Excerpted from - - - - - - - - - - - - - -
8uidebook for the
&echni0ues for (ffecti)e
&echnology ;ecision*
Making "orkshop
Copyright 1995 &he ;eciding :actor, All <ights <eser)ed
!resented by * * *
The Deciding Factor (TDF)
##ls, raining and %est -ra!ti!es
f#r Red(!ing t"e Risk
#f e!"n#l#g$ De!isi#ns
9=4 /outh /hore ;ri)e
9asking <idge, >ew #ersey ,69?, @/A
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3nternet2 64A?A.?661Bcompuser)e.com
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Chapter 1
)<e!(ti*e S(mmar$
A structured process can flush out project priorities in a faster, fairer
and more consistent way
&he ;eciding :actor 5&;:7 !ro$ect !rioriti%ation &emplate is a management tool
designed to both strengthen and simplify the process of ranking technology pro$ects
andCor features and functionality within a pro$ect. 3t1s primary focus is to offer a
structured, yet easy process for selecting the best alternati)es in a manner that
accurately reflects the enterprise1s true business needs.
&he e'ample enclosed prioriti%es three systems pro$ects. 3t shows how the pro$ect
rankings re)erse themsel)es when more than the traditional criteria of return on
in)estment, payback, etc. is considered. &he addition of carefully selected intangible
criteria, known to be of high importance to senior decision*makers, can be the key
that generates optimal rankings as well as buy*in to these results from all people
in)ol)ed.
Ke$ !#n!epts =e"ind t"is template in!l(de:
- (se #f !riteria !ateg#ries t"at =alan!e all t"e !#mpeting fa!t#rs t"at an
#rgani>ati#n em=ra!es?
- str(!t(red =rainst#rming t# (n!#*er ke$ !riteria t"at refle!t refle!t
de!isi#n-maker/s0 !#n!erns and g#als,
- a g(ided pr#!ess f#r dis!#*ering #*erl##ked !#sts and =enefits,
- a met"#d f#r ass(ring =alan!e =etween =(siness and te!"ni!al
*iewp#ints,
- a s!#ring and rep#rting pr#!ess t# make #pini#ns and *al(es m#re
*isi=le.
&ypical benefits from template usage include2 more complete and defensible
analyses, faster, more positi)e consensus*building among participants, and
enhanced senior management confidence that the e)aluation process itself was
accurate, thorough and fair.
?See, f#r e<ample, "e %alan!ed S!#re!ard - +eas(res t"at Dri*e -erf#rman!e& =$ R#=ert S.
Kaplan and Da*id -. 1#rt#n in t"e Har*ard %(siness Re*iew /Sept@O!t. A55B0 and t"e Cnf#rmati#n
)!#n#mi!s pr#De!t at Was"ingt#n 7ni*ersit$.
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Why Have a Structured Project Prioritization Process?
Cost of wrong decisions is high
&he business press is filled with failed strategies traceable to erroneous technology
decisions. &his is in spite of the fact that a si%able sum 5typically from 5 to 1,- of a
pro$ect1s cost7 is spent building $ustifications for the in)estment.
Poor technology decisions usually come from a too casually defined
decision-ma!ing process
"hat causes poor technology decisionsD Eur e'perience o)er the past nine
years corroborates the research of many others. &he causes of inade0uate decisions
are usually combinations of2
/A0 Defining t"e wr#ng pr#=lem and@#r #*erl##king #pti#ns
/60 7sing t"e wr#ng !riteria
/B0 Cnade'(atel$ resear!"ing t"e real !#sts and =enefits
/;0 7nf#reseen !#mpeting #pti#ns /#ften n#n-te!"n#l#g$ =ased0 wit" str#ng
appeal t# seni#r management
/:0 .ailing t# get =($-in fr#m p#liti!all$ p#werf(l pe#ple
90 La!k #f a str(!t(red pr#!ess f#!(sing #n anal$sis and !#nsens(s-
=(ilding.
What is TDFs Approach?
The process is the !ey
"e belie)e that a simple, well*concei)ed technology decision*making process, can
)ery effecti)ely o)ercome the causes of poor decisions. Ene of the central elements
in this process, is the &;: !ro$ect !rioriti%ation &emplate 5see ('hibit A, ('cel
filename F <anking.'ls7. &his template should be customi%ed to each organi%ation,
in order to reflect its culture and )alues.
Uses o the Te!p"ate
#se the template whene$er the right decision is important,
%ut not o%$ious
&he template can be especially useful for prioriti%ing * * *
# $o!petin% syste!s deve"op!ent projects
# &P' (&usiness Process 'e#en%ineerin%) options
# Syste! architecture a"ternatives
# *endor hard+are and,or sot+are proposa"s
# Any set o choices +here the -est decision is unc"ear.
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('ample of the &;: !ro$ect !rioriti%ation &emplate
/see )<"i=it A f#r a "ard !#p$ #f t"e template and file RA1KC1E.XLS f#r a w#rking m#del0
Three competing projects with different in$estment re&uirements
and payoffs The 'ituation: &hree pro$ects are proposed for impro)ing
organi%ational producti)ity2 !ro$ect A2 /ales Analysis /ystem 5sponsored by the
/ales ;ept.7, 3nitial Cost F GA,,H, !C*based, with downloads from a new ser)erI
one of first uses of client*ser)erI !ro$ect 92 3n)entory &racking 5sponsored by the
Manufacturing ;ept.7I 3nitial Cost F G15,H, e'tension of JA>*based system which
has been in place for two years, >o new technology. !ro$ect C2 9udget :orecasting
5sponsored by the :inance ;ept.7, 3nitial Cost F G65HI e'tension to e'isting
mainframe system, no new technology.
$onc"usions ro! /0hi-it A ana"ysis1
( )est (option changes when A** criteria considered
Rankings re*ersed t"emsel*es #n!e ALL de!isi#n !riteria are !#nsideredF
2/T1 &he most attracti)e option 5!ro$ect A2 /ales Analysis7 was >E& identified
initially, when only hard money factors 5lower in)estment, highest return on
in)estment7 were considered. Kowe)er, once the full scope of criteria of importance
to all decision*makers was flushed out 5see the 3ndirect 53ntangible7 Criteria
section7, then !ro$ect A won.
Type of Analysis +, -an!ing +. -an!ing +/ -an!ing
Kard Money analysis
only 5see &E&AJ
;3<(C& score7
Proj. $
(&ud%et)
(Score 3 456)
!ro$. 9 53n)entory7
5/core F =,7
!ro$. C 5/ales7
5/core F 457
Complete analysis
5see &E&AJ AJJ
:AC&E</7
Proj. A (Sa"es
Ana"ysis)
(Score 3 567)
!ro$.9 53n)entory
5/core F 1=67
!ro$. C 59udget7
5/core F 16A7
Scorin% 8ethod and For!at 0ecision category examples:
!ro$ects are compared by defining and scoring fourteen high le)el criteria, based on
consensus from the decision participants. 5A full*scale analysis often has ?, to A, of
these high le)el criteria.7 9nsi%hts rapid"y -eco!e visi-"e +hen the
"an%ua%e o the scoresheet is understood ('amine ('hibit A closely.
>otice how much information is re)ealed on a single page about the e)aluators1
concerns, outlooks, )alues, attitudes about opportunity as well as sensiti)ity to risk.
>otice also that, because all the scores are recapped on one sheet 5details,
rationale for the scores, etc are attached as supporting documents7, it is easy to see
the tradeoffs made. &his one page o)er)iew also helps rapid understanding if a true
9AJA>C( of )iewpoints and scores e'ists. &ypically this template ser)es as backup
for an e'ecuti)e summary which would contain mostly graphs and charts.
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Exhi%it A: Example of T01 Project Prioritization Template for -an!ing Three Projects
2 Project 0ecision Criteria 22 Criteria 2l2 Project 23 Project
"eight 'cores - - - - - - 4rades
A. Direct (Tangible) Criteria
A.Sa"es &. 9nv. $. &ud. 'al 2n$ )ud
9nvest!ent A!ount
15

15 A, +5 A 6 B
'eturn on 9nvest.: Pay-ac; Per.: etc
?5

5, 5, 65 6 6 B
T5TA* 02-ECT * * * * *
67
<= 76 456


B. Indirect (Intangible) Criteria

, 8External9 Customers - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
,:
>? ?> 4?
)enefits
8atch to @ey &usiness Strate%ies
= A? ?+ = ; B A
9!prove $usto!er Satisaction
A 9 4 A B 6 A
9!prove Aua"ity o Service
? 4 4 ? B B A
-is!s Bac; o $ust.Acceptance
? *+ *? , -6 -A 3
. 8External9 'hareholders - - - - - - - - - - - - - - - - - - - - - - - - - - - -
,:
>= <6 >=
)enefits
/nhance Financia" Peror!ance
15 +5 4, +5 B ; B
-is!s 8none specified9
/82nternal9 Employees - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
,:
46 #56 #56
)enefits &etter /!p.Satisaction
5 15 15 5 B B A
-is!s
'esistance to $han%e
5 *5 *?, *15 -A -; -B
Bac; o /!p"oyee Acceptance
5 , *15 *1, 3 -B -6
682nternal9 2nfrastructure 82nfo'ysetc9 - - - - - - - - - - -
,:
>= ?? 4=
)enefits

$o!patia-i"ity +ith Syste!s P"ans
4 ?+ 1= 4 ; B A
8atch to Technica" S;i""s
? ? + 4 A 6 B
Ti!e"y Data Access C Accuracy
5 ?5 15 5 : B A
-is!s ProjComplexity /Cntegrati#n,et!0 ? *4 *+ *? -B -6 -A
T5TA* 2;02-ECT * * * * *<7 ,6/ ,7= :/
TOTAL ALL FACTORS
100
567 47D 4D?

-A;>2;4' 51 P-5?ECT' LLLLL LLLLLLLL LLL+ , + . + /
9(>(:3&
8rades
range from
, 5lowest7
to M5
5highest7I
<3/H
8rades
range from
, 5least
risk7 to *5
5most
risk7.
!ro$ect
/CE<(/ are
calculated as
the /@M of
the NCriteria
"eightN 5col.
337 times the
N!ro$ect
8radeN 5col.
3O7 for each
criteria row.
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Si0 Su%%estions or 8a;in% your Te!p"ate Ein%F
Criteria 'election 8'ee Exhi%it A: 'ection 2 and 229:
(4) 9nvest ti!e in %ettin% the criteria ri%ht. &he right criteria sells key people on
the prioriti%ation process, as well as helps assure that top ranked pro$ects are truly
the best for the organi%ation.
(5) Put consensus#-ui"din% on center sta%e. @se criteria that appeals to all three
types of decision*makers2 senior management 5enterprise*wide, strategic concerns7,
operations management 5business unitCdepartment strategies, tactics7, 3/
management 5data, systems7
(?) Focus on the passionate concerns o the !ost po+eru" decision#!a;er(s).
&op managers care greatly about business results, often care little about data itself.
:or e'ample, instead of using pro)ide faster, more integrated data, substitute
instead impro)e customer satisfaction )ia faster response to hotline in0uiries.
(>) &e pro#active and creative in uncoverin% e0ecutive concerns. 8et inside
their heads. 3nter)iew them. @se secondary sources often rich with criteria
candidates, such as annual reports, employee newsletters, trade press articles or
industry analyst publications. 9usiness plans, if a)ailable, are especially useful..
(=) &a"ance your criteria. 8eneral guidelines2 ha)e at least A5- of your criteria
weights directly address senior management issues. At least A,- should specify
risks. ;irect 5Kard Money7 criteria weights range from A,- to =,- of the total.
Examples of 'enior Executi$e- 5riented Criteria Categories
*Company*wide management initiati)es 5e.g. :actoryC?,,,, or Customer is >umber 17
* Acceleration of productCser)ice introductions 5e.g. Jaunch 5,- more ser)ices in the ne't ? years7
* Kandling global competition 5e.g. 3mplement worldwide producti)ity standards or <educe losses to
international competition by ?,-Cyear7
* 3mpro)ing interdepartmental teamwork 5e.g. 3mpro)e salesCser)ice coordination7
* 8aining insights into the future 5.e.g.('pand early warning of emerging market changes7
4rading 'cales 8'ee Exhi%it A: 'ection 239:
547 @se customi%ed scales, not generic ones. :or criteria e'ample abo)e, 3mpro)e
customer satisfaction....hotline in0uires, consider the following grading scale.
Customized 4rading 'cale 4eneric 4rading
'cale
4rade 0efinition 4rade 0efinition
5 /ignificant increase in ? or more areas 5 Much
+ 3mportant increase in at least ? areas + /ome
A 3mportant increase in 1 area A A)erage
? /ome increase in at least ? areas ? Jittle
1 /ome increase in 1 area 1 Almost >one
, >o increase in any area , >one
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