In the digital era, the faster your IT initiative demonstrates value, the higher that value is perceived to be, writes Jim Maholic.
How do you assess the success of your projects? If you’re still relying on the old saw about being on-time and within budget, allow me to introduce you to our new normal.
In our new post-COVID reality, your fellow executives care less about those measures and are laser-focused on the speed of which your projects deliver actual business value. Value is the driver behind both the initiation of large projects and the measure by which project success is judged. Obtaining funding for a future capital request is enhanced when you can show that you delivered real business value from your past projects.
Fast Value is High Value
Your business partners assign value to an initiative by examining how it delivers against the “SEAR imperative”—favorably influencing Sales, Expenses, Assets and Risk. But value alone is not the complete story. The quicker you show value, the higher that value is perceived to be. Value must be coupled with timing to have real effect. I call this combination of value and timing “value velocity.”
Metrics around on-time delivery and staying within the budget, while important, do not communicate value. You must be able to show that your project delivers on the key business metrics that drove the project in the first place, both financial and operational. Financial metrics, as in the SEAR imperative, measure whether sales have increased, expenses were decreased, or assets were optimized (reduced inventory, or reduced time to collect outstanding receivables). Operational metrics may not have a direct financial measurement but are still very vital to business efficiency. Consider, for example, a call center project with the operational objective of reducing the average handle time of customer calls. If your team completed the project on time and within budget, but the average handle time of those calls did not decrease, your project was not a success. Communicating value is vital, and when coupled with timing it is powerful.
Agile Replaces the Five-Year Plan
The current business environment is much more dynamic today than it has ever been in history. As a result, the table stakes for every business keep being raised. What may have been a competitive advantage and cutting-edge technology two years ago is now an expected baseline of performance and capability.
The previously acceptable time horizon between creating a strategy, developing a plan and then executing that plan has been severely compressed. The five-year plans from years ago have given way to a more agile plan-and-do approaches that succeed in the new hyper-speed business environment. The old rules governing patience of executives with IT transformations are no longer relevant. The new paradigm is that value must be realized almost immediately. The IT planning horizon must be aligned with the business planning horizon. Business planning horizons are often brief, spanning only three to six months. IT initiatives that launch with three- to five-year implementation horizons are built on a fragile foundation of many assumptions.
By David Espindola
Value velocity is defined as the combination of three key considerations: speed, agility and timing.
- Speed: Speed is how fast your team can accomplish a task and deliver measurable value. Generally faster is better, if it does not compromise quality and safety.
- Agility: Agility is your ability to react and adapt and get back up to speed quickly. The marketplace is dynamic, priorities will change and unexpected challenges will arise during your transformation effort. Agility when faced with such challenges is fundamental to success.
- Timing: Timing is the combination of the factors that affect your success, most notably the availability of resources and the relationships between tasks. This is basic project planning. Can one task precede another or is it dependent on the completion of a prior task? Not all tasks can be accelerated simply by adding more resources.
The basic assumption for a five-year program is that the conditions that justified this initiative on the day of approval will remain largely intact five years hence. You’ll incur zero staff changes, zero changes in business direction, and a stable regulatory environment in which to operate. Such assumptions are simply unrealistic today. Market conditions, pandemics, regulations, consumer trends, access to capital, first-mover advantage and vital technology all change so fast that a program requiring a five-year commitment is a hard sell. Many of these influences are completely unpredictable. But being unpredictable does not create an exception to the expectations.
The market in which you compete is not going to mark time while your transformation plods along for 60 months. While immediate value realization within 30 days may not be possible, three- and five-year transformation plans with deferred benefit realization are increasingly intolerable. Agility in delivery is becoming critical. Your success is linked to the speed, agility and timing of the delivery of business value. The better you grasp, evangelize and deliver on the concept of value velocity, the more likely you and your transformation effort will achieve sustainable momentum and ultimately achieve success. Five-year transformation plans are certainly acceptable, but only when they are organized and executed in such a way that tangible, measurable financial business value is realized at key points along the way.
Your future success obtaining funding is linked to your ability to show how and when you delivered value on your previous projects. As you conduct your after-action reports on your completed projects, keep business value at the forefront of your success criteria. This will pay dividends for your future projects and your career in IT leadership.