We judge the success of digital transformation projects in wrong ways

IT projects are almost impossible to compare to each other and often judgements of good or right projects are based on unconscious use of fundamental devices. Associate professor at the IT University, Arisa Shollo, advices organizations to become more aware of the kind of the judgement devices they use in project selection processes as they lead to different kind of projects being selected . Projects within digital transformation would rarely be selected based on business cases and cost benefit models.

Arisa SholloProfessional educationBusiness IT Departmentbusinessinnovationmanagement

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But organizations should start investigating where these judgements come from and what kind of projects and eventually organizations they lead to.

Arisa Shollo, Associate professor at the IT University and teacher at the course IT Project and Portfolio Management
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- Most organizations make judgements of weather a project is good enough or not based on different devices, such as business cases, personal networks, experts and so on. But organizations should start investigating where these judgements come from and what kind of projects and eventually organizations they lead to, says Arisa Shollo.

The business case as a device does not stand alone
In many organizations a business case is required before you even start a project. But according to Arisa Shollo the business case is used as a one of the devices and does rarely stand alone when judging the selection or the success of a project.

- What does it mean to have a good or the right project? Where does this judgement come from? Is it a matter of strategy, taste or needs? The focus should be on where these judgements come from and which devices are used to shape them. There is no single device you can use to get success, but you need to reflect on the different devices and be conscious about the kind of projects they make room for. Everyone uses devices and all the devices have implications, says Arisa Shollo and explains the most common devices used for judging projects starting with the business case:

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A business case is a mechanism, which shapes the idea of a financially sound project according to cost-benefit analysis or benefit-cost ratio. And you have to consider, how much you want the selection and evaluation of projects to be based on a unidimensional scale.

Arisa Shollo, Associate professor at the IT University and teacher at the course IT Project and Portfolio Management
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- A business case is a mechanism, which shapes the idea of a financially sound project according to cost-benefit analysis or benefit-cost ratio. And you have to consider, how much you want the selection and evaluation of projects to be based on a unidimensional scale. What limitations are there to the mindset of business cases e.g. calculating, aggregating, abstracting? What kind of projects does the business case make room for and what projects are excluded?

Another device is expert intuition, which is quite the opposite of the business case:

- When expert intuitive judgment is used in evaluating projects room for more creative projects becomes available. Expert intuition cannot be articulated; it is usually expressed in terms of “gut feelings” and thus allows for more playful, experimental and potentially disruptive ideas. At the same time, however, using intuition means that you need to be aware of the biases that might be introduced in the process says Arisa Shollo. Potential success here is not measured based on calculating the return on investment but on a belief and commitment to success.

Besides business cases and intuitive judgments other devices could be: ranking lists, sponsors, experts (e.g. software architects and others with specific domain knowledge), personal networks and professional networks, labels, brands ect. All of these devices shape decision makers’ judgments and become the central mechanisms in the qualification of projects. They are active forces that complement, compete with and shape each other as well as the collective judgement in certain directions.

- An expert might judge the outcome different than personal networks or the business case. And with labels such as “strategic project”, “foundation project” and so on you categorize the project, which also shapes how people think of the project. It is important to be aware of the devices that are used in the organization and the power each of them have in qualifying a project. As well, being conscious when using specialists/experts’ opinion as it might focus on technical aspects and leave other elements in the background, explains Arisa Shollo.

Aligning judgment devices with innovation strategy
Often there will be more than one device in use, which could cause imbalance or conflict to qualifying projects. But more importantly the emergent use of devices is the actual innovative strategy of the company.

- Often you hear that the only thing you need is a sound business case. But often the business case conflicts with the experts’ opinion or the decision maker’s intuition. Organizations have to consider which devices are more important and how these devices work together to qualify a project. The more an organization emphasizes or promotes the use of one device the more imbalance there will be, says Arisa Shollo.

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The devices needed to support a new business idea or digital transformation initiatives are very different from those supporting the implementation of a new ERP system or upgrades of old systems.

Arisa Shollo, Associate professor at the IT University and teacher at the course IT Project and Portfolio Management
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Different devices allow the qualification of different kind of projects as any device highlights certain aspects while undermines others. The weight that organizations give to different devices is also a choice of innovation strategy. What kind of projects do you make room for? Do you make room for more efficiency, incremental improvements or experimental ideas?

- The devices needed to support a new business idea or digital transformation initiatives are very different from those supporting the implementation of a new ERP system or upgrades of old systems. The best advice is to consider what it means to use e.g. business case as a device with its focus on cost and benefit. What will happen to the project, if you choose this device? If you go for digital transformation projects, does it make sense to use business case as a device to qualify this kind of projects? And how should project success or failure be measured when value and benefit are so uncertain and ambiguous, explains Arisa Shollo and continues:

- Things with uncertain value are defined by taste, not benefit/cost ratio. It is like talking about the choice between beer and wine. No matter how cheap beer is, it is not the same as wine. At the end of the day, it is a matter of taste. And if what you really want is wine, you cannot settle for beer even though the cost is very appealing. It is the same with digital transformation projects.