The Yellow Brick Road (cont'd)

Pragmatic ROI
What goes into a Pragmatic ROI? Part 1 establishes a baseline, and forms the core of the Concept phase of a project. Part 1 tries to answer the question: "Why should we do something?" Here are the key ingredients of Part 1:

1. An agreed base of corporate metrics. This is the base set of data that everyone in a company agrees is readily available, reasonably accurate, and descriptive of the corporate vision. For example, if the vision is to be the leading supplier of high-speed services, then the corporate metrics should include tracking the growth of those services. The kind of data that is reviewed by the executive team on a regular basis, it should be a cross section of information important to the overall corporation and therefore relevant when assessing the potential return on investment, to the corporation.
2. Current pain points. Capture specific examples of how the pain manifests itself - lost records, long holding time, missing payments, customer complaints, network outages, missed commitment dates, etc. These are great for getting started on defining Business Requirements too...!
3. A description of the impact of the problem. Anecdotal data is an excellent way of helping others understand the problem. We all learn from stories - both good news stories and horror stories - because we can relate to them and remember them much better than impersonal data sets. This is especially true when trying to gain support from people with little or no background in the problem. In today's cautious investment environment, it is often the case that executives from all areas of the company will be involved in deciding which projects to fund - compelling anecdotal data is essential to winning support from the Engineering Director for a Billing project.
4. Describe as clearly as possible how the company would function if the problem were eliminated. Decide how to measure that the problem had been fixed. This is also good input to Business Requirements definition, to the development of User Acceptance Test cases, and to identifying where performance measurements are needed.
5. An assessment of the impact on the current OSS Architecture and OSS Investment Plan. This should include a high level analysis of changes in information flow, data requirements, any DCN impacts, etc.
6. A risk assessment. Another common corporate component that should be used for every evaluation. Consider factors such as the number of initiatives underway, success with similar initiatives, availability of skilled people and funding, enthusiasm and persuasiveness of the likely executive sponsor, degree of reliance on vendors, degree of technical challenge, estimated project duration, number of interfacing systems, etc.

The Pragmatic ROI, part 1, is then ready for review. Part 1 is an initial view, the core of the Concept phase of a project. Without any estimates of how much it might cost to solve the problem, it sets the baseline for determining how much effort should go into solving this problem - its corporate priority, and the upper limit of how much the corporation is willing to spend to solve it. Part 1 can be completed very quickly; a few weeks at most. Unlike in a traditional approach to ROI, the baseline figures gathered in this phase need only be good enough, not perfect. Key decision makers get a chance to determine what 'good enough' means before moving on. We find that it is much easier to establish consensus on a 'good enough' baseline as a separate, pragmatic first step than when it is already built into a finished business case. Part 1 of the Pragmatic ROI establishes consensus on: "Something Must Be Done".

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