Over the last 3 years I have had the privilege of talking to a lot of senior level executives: CEOs, CFOs, COOs and CIOs. During that time I have been asking executives in multiple industries from retail to financial services how they make large technology investment decisions.
All of the senior executives have consistently named 4 key factors in their decision making process. They have also given very consistent estimates of how important each of those factors were:
- Does this investment help me solve strategic problem or key business challenge? (weight 50-60%). This is what we call “business story.” How does this investment help my business or addresses problem that I think is important enough? The interesting part is that all executives give this factor 50%+ weight making it single most important factor. That means that no investment decision can be made without link to strategy enablement, or without addressing important business story. It also means that if you nail that story, the other parts are not that important
- ROI – what is the tangible benefit that will hit my P&L? (weight 30-40%). And by tangible benefit I mean something that can I take to the bank. If I cannot, then it does not belong in ROI calculations. Business executives are tired of all those business cases that show millions of benefits by saving 5 minutes of each employee's time. Such ROIs are rarely appealing to senior executives
- How feasible and how risky is this project? (weight 10-20%). It really surprised me that little weight riskiness of the project had. But at the end of the day, if you don’t take risk, you’ll never make any progress. And typically there is a strong correlation between return and risk. Senior execs are not afraid to take calculated risk, they just don’t take “silly” risks
- Infrastructure fit or technical innovation (weight 0-10%) – this is the “coolness” factor or fit with the technology landscape for the sake of consistency. For example, if company is looking for a Business Intelligence solution, gaining visibility into business performance helps solve key business challenge. Accessing reports on the iPad is a cool feature and can tip a scale in favor of one solution vs another, but will probably not be a major driver for choosing BI solution. Unless of course, there it can be linked to some high value problem. Like providing information in real time during negotiations with vendors.
How does that compare to your experience? I would love to hear if you had similar observations
leedevine girishbhambhani geoff.maxwell
