2006_030919 - 2 - Prioritising Technology Investments September 2003 © 2003 Sixhills Consulting Ltd & Author Despite the significance and size of the investments involved, we often find that the decision processes are not well managed. Specifically, projects are only either approved or turned down – they are rarely compared to each other for purposes of prioritisation. The development budget is simply allocated until it is exhausted leaving more well-deserving projects which arise later with no funding, as there is often little will to stop projects once they are funded and underway. By contrast, a rigorous comparative prioritisation process could move forward investments with the higher returns and defer (or cancel) those with the lower return. As a result, the cash flow of the organisation would be significantly improved. Technology Investment Prioritisation We have developed a very practical framework to assess and prioritise investments and so freeing up cash from an organisation's investment portfolio consistent with its strategic objectives: ‘Technology Investment Prioritisation’ Exhibit 2 - Prioritisation Framework Proposed Application Development EffortsInnovationSustainingInfrastructureSmall ProjectsFixed Project BudgetDeclineAccept12345Project£ fixed cap Scorecard1 2 3 4 5 6 7 8NPV of ProjectProjectApproveDeclineHHLLAttractivenessFeasibility? ?20%Technology20%Compliance10%Operation14%Service16%Strategic AlignmentScore20%Financial ImpactWeight-ingRewa rd20%Technology30%ProjectScore50%BusinessWeight-ingRiskFixed BudgetFinancial AppraisalEffort/RewardSelection Tools The framework actionGoTo:2,(Exhibit actionGoTo:2,2) embraces a set of tools and methods used to evaluate and prioritise investments. The method used depends on the macro level classification of the proposed development spending, e.g.,  Innovation – it can be quite difficult to justify investments supporting new and untried business models using traditional valuation methods yet these projects can hold the key to significant new sources of value (as ‘disruptive’ innovations). A soft, almost ‘gut feel’ framework such as an effort/reward matrix can be useful here to visualise the relative positioning of different projects – linking the attractiveness of the opportunity with an assessment of its feasibility and timing;  Sustaining – for those investments supporting the existing business model, rigorous financial appraisal and justification is necessary. As these investments often form the greatest proportion of spend, they
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