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Tracking IT Spend and Project Management ROI

Tracking IT Spend and Project Management ROI

For any business process, being able to determine the return on investment (ROI) can be crucial. Money spent on IT solutions and project management is no exception. Tracking IT spend—such as money spent on IT project management salary, tools, and software—is a critical part of determining ROI for IT.

Aside from determining ROI, it’s important to find ways to optimize IT project management processes to improve productivity and results for the whole organization. How can you keep track of your IT project management? What are the benefits of tracking IT spend? How can you use data to improve IT project management?

What Is IT Project Management?

IT project management is a kind of catch-all term for the processes and procedures an organization uses to plan, organize, and implement IT initiatives to achieve specific business goals.

The goal of different methods of IT project management is (usually) to help make project work more consistent and timely while minimizing “scope creep” and budget overruns.

IT Project Management Examples

There are many different examples of IT project management methodologies that businesses can use, such as:

  • Scrum, which provides “a simple framework for effective team collaboration on complex products.” This involves breaking projects into short-term sprints with daily meetings to get teams aligned and conducting meetings to review completed sprints and identify potential ways to improve the next sprint.
  • The waterfall (i.e. “traditional”) methodology, where project steps are conducted in a set of static processes one after the other in a particular order—Requirements, Design, Implementation, Verification, and Maintenance. This is often ideal for projects with clearly-defined end products, goals, and budgets. However, it can struggle when goals are vague or there are changes to project requirements because of the method’s inherent inflexibility.
  • Agile methodology, which “is an iterative approach to managing software development projects that focuses on continuous releases and incorporating customer feedback with every iteration.” Agile methodologies for IT project management seek to reduce complexity in the short term and make projects more flexible. Scrum is an example of an agile IT project management methodology.
  • Critical chain project management, which focuses on identifying the “critical path” in a given project, loading the necessary resources, and creating buffers to act as a safety margin to ensure the project can be completed on-schedule. This is a methodology that can be applied to any number of projects—not just project management for IT.
  • Kanban frameworks, which use visualization tools (called Kanban boards) to help teams track the flow of work from one step to the next. Less a methodology in and of itself than a tool for helping visualize progress in other methodologies. Kanban boards can be created for almost any set process.
  • Lean project management, a process popularized by the Toyota Production System (which also implemented Kanban boards alongside their lean process), is traditionally associated with manufacturing. However, the principles of lean project management (specifying customer value, mapping the value stream, eliminating waste, letting customers “pull” before taking action, and striving for continuous improvement) can be easily applied to IT project management.

You may not need a Master’s in IT project management to get the gist of any of the above examples. However, many people spend years pursuing IT project management degrees or business management degrees where they take IT project management courses (and other business-related classes) to master the art of picking and implementing the right methodology for the right project.

How Do You Keep Track of Your IT Project Management?

Now that we know a bit about the different types of IT project management methods, how can a business keep track of its IT project ROI?

The traditional formula for calculating ROI for any given project requires a project manager to know:

  • The amount of time required for a project (T);
  • The volume/quantity of units or people required (V);
  • Dollar cost required for the project (D);
  • Pre-project value for the business assets impacted by the project (current); and
  • The project’s impacts on processes, the business’ bottom line, or personnel/resources (Project).

These factors are immensely useful for calculating the total real cost of an IT project and measuring its impact on the business after completion.

However, it can be difficult to establish a precise ROI for IT project management tools and processes because they don’t always affect the “bottom line” directly. The ROI for IT improvements may not be monetary like they would be for the release of a new product. Instead, ROI may come in the form of improved efficiency for specific tasks or the elimination of certain roadblocks to productivity. So, the ROI formula would need to be tweaked to match the specific goals of the project and show how those goals provide a return for the business.

For example, let’s say that the goal for one IT project is to make a specific process more efficient by developing some new software. If labor on that task is equal to $15 an hour, with 100 people working on that task for an hour each week, the pre-project cost of that task is $1,500/week. If an IT project to improve that process with new software costs $10,000 and improves efficiency by 10% (saving employees six minutes a week), then $150/week is saved.

In this example, it would take over 66 weeks for the IT project to provide enough time and labor savings to pay for itself. However, it’s important to note that this is an oversimplified calculation—it doesn’t take into account the added productivity of those 100 employees from saving that small amount of time, individual variances in productivity, or other potential add-on effects of a change in IT.

The Benefits of Tracking IT Spend

So, why would a company want to track its spending on IT projects and project management software/tools? Some potential benefits of tracking IT spend and gathering data about IT project management processes include:

  • Preventing Overspending. Not all IT spend is good IT spend. It is possible for a project to not provide enough ROI to justify the initial expense. Tracking IT spend and using that data to identify projects that are likely to encounter cost overruns or simply fail to produce a meaningful ROI is important for curbing overspending.
  • Demonstrating ROI to Decision Makers/Key Stakeholders. When an IT project is important to the future of the organization, it’s important to ensure that the decision makers and stakeholders to get their buy-in. The ROI tracking example from the above section could be a good demonstration: while the initial ROI ($150/week) for $10k of spend doesn’t seem like a good ROI at first, after one year, the project would start producing more money than it cost. With this kind of information, it would be easier to showcase the long-term impacts of an IT project so leadership can make a more informed decision and be more likely to adopt projects that will have a long-term positive impact.
  • Focusing Efforts on High Priority Projects. Every business has a limited budget for all of the projects it needs to complete. Being able to prioritize those projects effectively is a must-have capability. Tracking the ROI of project management for IT initiatives helps organizations prioritize those projects that will have a larger impact at a smaller cost—making more effective and efficient use of limited resources.
  • Collecting Useful Data for Optimizing Future Projects. One of the uses of collecting data about an IT project is that it helps to identify potential inefficiencies in the IT project management workflow. This can then be used to improve future projects, increasing efficiency and results. It can also help with IT project risk management by making it easier to identify projects with high risk factors from previous projects.

Optimize Your IT Project Management with Data

The final benefit in the above bullet list is especially important for managing IT project management spend and maximizing ROI in the long term. However, data collection requires having the right tools for gaining insights into IT projects and their management.

Better Insights Make for Better IT Performance and More Business-Minded IT Decisions

Why is having data so important to better IT performance? Consider this hypothetical example of two companies:

Company A and Company B are both in the same industry, are of a similar size, and are direct competitors in the same markets. Both companies decide to launch several new IT projects to improve their services and make internal workflows faster and more consistent.

However, before launching their new IT projects, Company A decides to implement an IT project management software solution that can help them track critical data about their IT projects. Company B decides to simply implement all of their planned projects without making any modifications.

After the first IT project goes a bit off the rails (taking up more time and money than originally planned) for both companies, there’s an internal review. Company A, with its data collection solution, is able to diagnose the problem effectively—introducing a minor change to their IT project management methods to solve an issue that was making the project team miss deadlines and consume more resources. Company B simply slashed the budget for their other projects without making additional changes to account for the problem.

With one simple change, Company A was able to make all of their subsequent IT projects run more smoothly—keeping them on-time and on-budget while more accurately tracking what was going on and accumulating data that could be useful for further IT optimizations.

Company B, on the other hand, kept running into cost overruns for all subsequent IT projects. When they cut project staffing to reduce costs, their IT projects simply ended up getting delayed—putting off any potential IT ROI for months. Had they gotten the data they needed to make more meaningful, business-minded IT decisions, they could have avoided breaking the budget.

Systems X Project Management

Having the right IT project management skills and tools should never be underestimated. However, not every business can realistically afford to hire extensively for IT project management jobs, provide IT project management training, find all of the tools and software they need, and make everything work as part of a cohesive business process. This is where an outsourced IT project management service can help.

Systems X can provide the IT project management templates, tools, and skills that businesses need to track their IT project ROI and simplify IT change management. Our proactive IT management approach focuses on:

  • Mitigating productivity risks before they become a problem;
  • Providing state-of-the-art monitoring solutions to collect the data you need to make more informed IT decisions;
  • Maximizing IT asset value with optimized lifecycle management; and
  • Providing a high (and demonstrable) return on investment.

Need help with your IT project management now? Reach out to Systems X today to get started!


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