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FRIDAY, SEPTEMBER 04, 2015
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Operations IT Using a Criteria-Based Matrix to Prioritize IT Projects

Using a Criteria-Based Matrix to Prioritize IT Projects

One of the common challenges for a company’s information technology (IT) department is how to prioritize IT projects that can deliver the greatest benefits to the business. A criteria-based matrix can be an effective tool in prioritizing the IT projects with just such results. The matrix is a vast improvement over allowing priorities to be set by the biases of certain stakeholders who insist that some projects are more critical than others without any evidence to support their claims.

An eight-step approach to building a criteria-based matrix provides a workable prioritizing system.

Step 1: Identify all key IT project stakeholders, e.g., business managers, IT project managers, business sponsors, etc.

Step 2: Organize a workshop to build the criteria-based matrix and use it to set priorities. Participants will be all the stakeholders identified in Step 1.

Step 3: Outline the projects that need to be evaluated for prioritization, using the knowledge and expertise of the workshop participants.

Step 4: With the involvement of all the participants, identify the criteria that can be used to judge the projects. The approach to identifying criteria may include:

  • Identifying practical constraints (e.g., How easy is it to do?).
  • Considering the benefits, costs and risks.

Aim for criteria that can be measured objectively and easily, rather than subjectively or with difficulty. The criteria shown in the table below are examples. Organizations or project teams should identify their own criteria.

Criteria-Based Matrix for Prioritizing IT Projects

Criteria

Scoring

Project 1

Project 2

Project 3

Project 4

Competitive Advantage Rating


Weighting


Score

4


5


20

5


5


25

4


5


20

3


5


15

Customer Satisfaction Rating


Weighting


Score

2


5


10

2


5


10

3


5


15

5


5


25

Estimated Project Cost Rating


Weighting


Score

3


3


9

4


3


12

3


3


9

5


3


15

Potential Revenue Rating


Weighting


Score

3


3


9

3


3


9

4


3


12

3


3


9

Ease of Implementing Rating


Weighting


Score

3


4


12

4


4


16

4


4


10

2


4


8

Total Score

60

65

73

72

Step 5: Allocate a weighting number to each criterion on a scale of 1 to 5, with 1 being least important and 5 being most important to the operation of the business.

Step 6: On a similar scale of 1 to 5, rate each project on its impact on each criterion identified in Step 5, with 1 being the least positive impact and 5 being the most positive impact on that particular criterion.

Step 7: Multiply each rating from Step 6 by the weighting number allocated to each criterion in Step 5 to get the score for each project for each criterion.

Step 8: The matrix is complete when all the weighted scores from Step 7 are added up for each project. The matrix clearly shows which projects have the highest scores, and thus which ones should be the top priority projects.

Conclusion: From the sample criteria-based matrix, it is clear that Projects 3 and 4 need to be done sooner than Projects 1 and 2. The matrix has improved management of IT projects by prioritizing them against identified criteria. The company’s IT department can use this tool to prioritize projects with highest customer and business impact and can then assign appropriate resources to complete these projects within an acceptable time frame.

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Comments

Prasanna Hatti

Hi Ankur,

Two comments. The preferred direction of criteria is an important point. In your example, all the criterias preferred to be maximized except estimated project cost which needs to be minimized. To elaborate, if my project cost is very high compared to other projects, the risk of high cost project being chosen is high because of high total score. This is incorrect. The criterias should be rewritten in such a way that all of them point towards the same direction. Else, this tool will be ineffective.

Also, the rating can be 1, 3 and 9 ( to indicate Low, Medium and High) instead of ratings between 1 to 5. This will increase the difference in the total score and avoid close competition among the candidate projects/solutions.

Thanks,
Prasanna Hatti

Reply
Profile photo of Prabhu V
Prabhu V

Dear readers,

I am also acknowledging Mr. Prasanna’s opinion, apart from above considerations on maximising/minimising functions that the above table can lead to vague/inappropriate recommendations to the management/users. (It is similar to the XY matrix/ Prioritization matrix)

Increasing the rating scale 1 to 9 seems to be more robust than 1 to 5 scale.

Thanks for the article!

Reply
sandi

how come you are adding up the estimated project cost and have that criteria positively impact the score? I thought cost is what you need to reduce?

Reply
Nick

Good question! I would guess that a higher score indicates higher cost effectiveness rather than higher costs.

Reply
Nick

To expand on this, higher cost effectiveness could mean higher return on investment. It’s also possible a higher score correlates with the lowest cost, where 1 would be the score for a very expensive project and 5 would be a very inexpensive project — depending on how the document owner chose to apply the matrix.

Reply
Adam S.

A higher rating is lower cost?

Reply
Nick

An alternate way of managing the weights for each criterion would be to allocate a percentage. As an example, with the criteria listed above, the stakeholders may allocate 45% to Customer Satisfaction, 20% to Estimated Project Cost, 15% to Potential Revenue, 10% to Ease of Implementation, 7% to Potential Revenue, and 3% to Competitive Advantage.

Using percentages rather than a 1-5 scale has helped me (and the stakeholders I’ve worked with) better understand the importance of each criterion relative to the other criteria. Try it out some time!

Reply
Nik

Matrix prioritization is a good idea, however, there is also some risk to the quality of one’s long term IT strategy and infrastructure. Our company has been using matrix prioritization of IT projects for over a decade. The “top projects” get funding, resources, and management. However, what of the projects that didn’t make the high priority cut? Do people continue working ineffectively and feeling frustrated their need wasn’t “good enough?” Or, (more likely) do they turn somewhere else or to someone else to develop a fix for them instead? What happens as a result could introduce a significant risk to a company’s long term IT strategy and infrastructure.

We’ve seen two things happen: 1) IT has a reputation for not being helpful because they are screening what they take on. 2) People are developing their own fixes faster, cheaper, and outside of IT’s infrastructure and configuration management.

The recommendation would be to use a matrix to prioritize the work for about 80% of your organization’s capacity and funding; those things that are high payback and/or easy to implement. And reserve about (or at least) 20% for IT projects that didn’t make the cut, but represent some other sort of priority: gain critical buy in from the “customer”, integrate a solution that should really be integrated into the IT infrastructure (to prevent them from developing something that will be risky long term), or meet an important need that arises during the year, between the matrix prioritization sessions.

A matrix approach is effective, and it shouldn’t be the only strategy one uses to determine what to work on.

Reply
Nick

Wow, Nik! I could swear we’re working at the same company… I was just having a conversation with my immediate supervisor this morning, making the suggestion that IT should approach their work from a 75%/25% split with the priority list being addressed by the 75% and the quick & easy projects being managed by the remaining 25% of their resources.

Reply
Profile photo of Norbert Feher
Norbert Feher

Hi,

I agree with the other comments that the idea is good.
My point is that I would not talk about IT projects alone due to the fact that a company needs business projects with IT support and not vica versa therefore it can be very-very misleading to ask the opinion of some IT guys.

For a resource maximization solution I would prepare a company wide prioritization list together with the management team and select the best of them.

Here are some criteria we use with a scoring between 0-10:
– Relation to strategic goals
– Relation to key processes
– Impact on Customer
– Availability of data
– Measurable
– Cost Saving (k USD)
– ROIC
– Complexity of the project
– Time to solve the problem
– Quantification of financial impact
– Employee satisfaction
– Special reason for change
– Resource availability (time, man, money)

Of course these criteria are also weighted based on voice of the customer.

With best regards,

Norbert

Reply
Profile photo of Greg Allgeier
Greg Allgeier

project 3, ease of implementing. 4 x 4 is 16 not 10

Reply
Guy

Like most approaches in business this can be used as a tool, as others have stated it may not be the end all final decision but gives good insight comparing projects based on the criteria chosen. Looking at the results may lead you to compare them vs the long term strategy (or that could be a criteria), Like zeroing in a firearm, it ought to get you on the paper.

Reply
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