Use metrics to prove your IT project's worth

If you ever talk to Andrew Stewart, don't say the words "IT project."

As financial director at GAP Group, a $100 million equipment rental firm in Glasgow, Scotland, Stewart had to help his firm decide whether to spend $2 million on a new ERP (enterprise resource planning) system. Using Intentia's Opportunity Analyzer software, the company asked decision makers across the 700-person firm to define what they wanted the project to achieve and how to measure its success. There was only one rule: The phrase "IT project" was banned from all conversation.

"We didn't want our people thinking of it as something that has been forced on them by the technology department," Stewart explains. "For the system to work we needed buy-in from everyone."

Among other benefits, the opportunity analysis process resulted in a series of easily measured KPIs (key performance indicators). For example, building error-checking tools into the data entry system would increase accuracy from 95 percent to 99 percent, reducing billing mistakes. Automating administrative tasks would allow salespeople to make more calls each day, generating more revenue. By doing a better job of tracking idle equipment, the company could move heavy machinery closer to locations where it was needed, thereby getting a higher return on investment.

All told, GAP Group realized the new system could boost profits 10 percent per year -- a figure that would bring a smile to any financial director's lips.

This kind of careful project planning, however, is the exception, not the rule. More than half of all IT projects are over budget, off schedule, or fail to deliver the promised benefits, according to annual surveys by The Standish Group. That's because most companies don't do a good job of defining -- or measuring -- a project's goals.

Even worse, projects that come in on time, on budget, and to spec may still be perceived as failures. Although executives are often guilty of not clearly defining the business objectives -- or of continually moving the goalposts -- the IT side usually does an even worse job of communicating what it has accomplished. It's a double whammy that can spell doom for even the most promising projects. 

When bad things happen to good IT people

With some IT initiatives, success is easy to measure. If you're installing a CRM system that increases outbound sales calls or a knowledge-base app that leads to cuts in help desk staff, the ROI is clear. The bosses know what they're getting for their money, and everybody goes home happy, provided the project works as advertised.

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But when it comes to services that keep the business humming, IT may be seen as little more than a drag on the bottom line -- and a lightning rod when things go wrong. Many tech managers find themselves in the awkward position of measuring their success by the bad things that haven't happened yet.