Managing Your IT Projects Like A Financial Portfolio Pays Off
Few insurance companies today have any budget for mistakes and few projects produce more internal anxiety than information technology (IT) projects.
IT projects have a lot of variables–cost, project length and, especially, the successful outcome of the project. They often involve technology that is new and foreign to many executives on the business side of the organization.
The question for most insurance organizations is how to mitigate the risks associated with IT projects and ensure that all IT projects not only come in on time and on budget, but that they are in line with the organizations corporate strategy.
It is also critical to have a closed loop system–including planning, budgeting, executing, monitoring and evaluating.
Insurance companies across the country are confronting the dual challenges of legacy technology applications and limited IT budgets. The reality is that companies can only fund IT projects that provide maximum business value.
The challenge that lands on the shoulders of CIOs and CTOs is choosing the best combination of projects that map to the insurance companys corporate strategy–not just in the short term but in the long term as well.
The danger companies run into is that of only addressing immediate pain points rather than taking a more strategic view of their IT needs. Success with IT project planning requires careful evaluation of business strategy, financial analysis and, most importantly, real-time collaboration with business leaders.
In the past, executives have struggled with various techniques for evaluating IT projects, using technologies that monitor single projects in isolation. These technologies look at one project at a time and one metric at a time–for example, measuring the success of a project based solely on its return on investment.
While they can ensure the effective management of individual projects, these applications dont provide a link between these projects and the overall direction of the organization. Therefore, there is no assurance that a project that comes in on time and on budget will lead to optimal success for the organization.
Some insurance companies are turning to a new method to track the progress of their IT projects, a concept called project portfolio management (PPM). PPM has its origins in the techniques applied to manage financial portfolios.
In this case, IT projects are collected in an IT portfolio and treated as investments. Like financial investments, theyre reviewed and controlled as one set of interrelated activities. This approach ensures IT projects are well-balanced in terms of size, risk and payoff, while facilitating better alignment between IT and the business and controlling costs.
While technology to manage IT projects has been available for the last few years, only recently has it become sophisticated enough truly to assist executives with prioritizing workload, ranking initiatives by business value and managing resources.