When one looks at “strategic demand,” there are a number of ways to evaluate demand. Clearly, value versus risk is a valuable methodology to consider. However, I want to suggest that there is something that you need to do before you evaluate value and risk. You need to evaluate the alignment with business strategy and requirements. Many things may be important to the business at any point, but first you must determine what IT can do that relates to business strategy.
Find the three to six capabilities that give your business—as Booz and Company likes to say—its “right to win.” These are the capabilities that enable your firm to engage in any competitive market with a better-than-even chance of success. Look for where the business depends on IT to provide the ability to reliably, consistently achieve a “distinctive business outcome,” or where automation could help the business deliver even more distinctive business outcomes. These capabilities are embodied in processes, tools, knowledge, skills and organization. The ones that matter are the things that few others can master.
So what some examples? It can be the ability to secure and manage shelf space or the ability to mine customer data to develop new and unique products and services. Think of all the things that allow Coke to be ubiquitous, promoting iconic product identities around the world; or Target’s ability to provide affordable, fashion-forward merchandize for image-conscious consumers. Whatever is in your firm’s capability system, you should start by determining that list and then keep only the initiatives, programs and projects that concretely fit against them. With this done, you can plot value and risk or prepare a sophisticated bubble chart—but the gating item for every initiative, program and project being considered should be the enterprise capabilities system. Everything should add value or shouldn’t happen at all, because there are no related IT initiatives, programs and projects in isolation of the business. That’s the secret to prioritizing strategic demand.
Solution page: Project and Portfolio Management