Contrasting approaches to a shortage of tech-savvy staff are shown in the table below.
This table was referenced in an earlier lesson.
The primary means of mitigating risk is to allocate more time and skilled resources to advanced preparation and planning during the initial stages of the project. This requires the expenditure of additional labor and its associated costs using accelerated delivery and lowering budgets.
Many firms resist theinitial phase investments and as a result, many projects fail to reach their full potential.
Those organizations that fail to recognize the potential complexity of an ebusiness solution deployment and the need for additional planning to support it almost always incur unanticipated costs while they learn to integrate and subsequently use these systems in daily operations.
Even with the capable tools to supplement their estimating efforts, many firms simply do not accurately perform cost and benefit analyses nor do they interpret the resulting data correctly. Jupiter Research reports that most firms that perform ROI analysis on their IT projects do so with staffs that provide either an inherent bias to their analysis or that have not been properly trained to fully recognize the many aspects of this type of analysis Staffed assigned from the Information Technology departments to perform an analysis may understand
the technical details of their projects but seldom have access to information regarding the financial impacts of
their projects on the company.
Conversely, finance and accounting departments can determine the impacts of the
expended costs and perform detailed "historical evaluations" of a project if the needed data is collected
but seldom have complete or sufficient data for accurate ex ante evaluations. The key mitigation of this potential
failing is training individuals in the use of the tools and methodologies that are provided to them for estimating
purposes. This includes estimate preparation as well as simulation output interpretation.
The process that facilitates the collection of estimates must recognize that both the benefits and the costs contain
many tangible and intangible elements. The detailed quantification of those elements is often difficult to
accomplish. Intangible costs
or benefits should be considered carefully before they are included as quantified
values within a simulation. E-business solution analysis requires the creation of a simulation that reflects an organization’s
approach to business, the quantification of many variables, both known and estimated, and a use
methodology that provides consistent valuations between solutions.
An intangible cost is a cost that can be identified but cannot be quantified or easily estimated. Common intangible costs include loss of employee morale or brand damage.
While directly measurable, intangible costs can have a very real impact on a company's bottom line.