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Insights
18/12/23

IT renewal needs a clear goal

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Yes, IT projects often go horribly wrong, particularly in financial terms. But these budget overruns are quite preventable. In a series of articles, I will provide a guide for executives with budget responsibility to gain control over costs – by empowering them to ask the right questions to their IT executives and to the external IT companies involved. The first question to ask is: what do we want to achieve with this system?

The list of government IT projects that have spiralled out of control is enormous, as also revealed by numerous studies conducted by the Dutch governmental audit organisation Algemene Rekenkamer since the 1990s.

And it’s not just in the public sector where things frequently go wrong. Budget overruns are also rife in the corporate world.

Still, executives who are made wary by all the negative news about IT projects should understand that it doesn’t have to be this way. In order to keep a grip on the cost of IT renewal, there are a number of important questions that you as an executive can ask, perhaps even should ask, the IT executive initiating IT renewal.

Because you foot the bill

Why is it up to you to ask these questions? Yes, you should be able to trust that your executives and your IT suppliers do a top job whilst keeping an eye on the budget. But ultimately, you are either a budget holding executive that foots the bill or your team is one way or another affected by the cost of IT renewal. It’s the economics of IT renewal that oblige you to be watchful.

There are questions to be asked both before and during the construction process. In this article, I will explore the first question to be asked before embarking on the replacement of an essential IT system.

What do we want to achieve with this system?

It’s easy to overlook the first and most crucial question in any new IT project: ‘Why do we want this? What do we want to achieve with this system’ While it might seem obvious to ask this, this critical initial step is often skipped. This happens for various reasons.

For instance, an executive might have blind trust in the company’s CIO. If he says a new system is absolutely necessary, well then that’s that. It’s also safe to say that not everyone on the business side is  particularly interested in the nitty gritty details of IT systems. They just want to get on with their own job.

The three reasons of IT renewal

Still, it’s a really useful question. There are basically three main reasons why companies want to replace an essential IT system.

  • Because the company is outgrowing this IT system
  • Because the system is outdated and needs to be replaced
  • Because the business of the company is changing

Once the why of the project is crystal clear to everyone, dig deeper. If this is the goal, is there then an actual business case?

Think of it like renovating and upgrading a whole floor of your office building because that would make employees happier. Sounds logical. But in one or two years’ time, will your company actually be making use of that floor?

By asking the why question and really digging into the subject, you realize several things. First, it provides a clear indication of whether the project actually has a defined goal and what that is.

By extension, the answer offers insight into whether this goal aligns with the company’s – and your! – business objectives.

Stick to the plan

Thirdly, having the objective crystal clear will be useful later on – during the development of the system. A lot of the time, where IT renewal goes wrong, both from a financial and time perspective, is when programmers and executives lose sight of the original plan.

Keeping this goal at the forefront at all times ensures that everyone is aligned with this same objective.

Management board alignment is necessary

Lastly, when you are a key player in the renewal trajectory, there is an additional point to ponder: be mindful about the management team. Is the objective merely to replace an antiquated system? If so, in consultation with the IT executive, add one or more extra goals.

Rolf Bonninga


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