4 Ways to Increase Project Approval for IT Leaders

If you’re an IT professional, learning the language of business to supplement your technical knowledge can greatly benefit both you and your company. Most non-technical leaders struggle to understand the value proposition of technology upgrades and investments. Instead, they look to IT leaders to explain the risks and rewards involved. However, IT professionals often focus on technical improvements but do not clearly align the benefits of new technology with the goals of the C-suite.

The following four tips will help you bridge the gap between technobabble and business fluency.

1. Understand How to Calculate Return On Investment (ROI)

Return on Investment, or ROI, is the most common way businesses measure the impact of a project. If you can’t show or explain how you will decrease costs over time, or improve productivity in some way, you run the risk of not receiving funding for your project. The first step to estimate the ROI of a project is defining all related costs. The estimate should include direct costs such as new software purchases and indirect costs like the labor to implement new software.

The second step is to estimate how the software improvement will impact the bottom or top line revenue. Will it drive new revenue? Reduce costs? Improve efficiency? How many months will it take to recoup the cost of the initial project? As a general rule of thumb, calculate ROI over a three-year period. Individual circumstances may need more or less time, however, if the ROI is calculated using less than three years, it’s likely that the investment is not very solid.

2. Demonstrate Lowered or Controlled Risk

Technical investments often include some risk. Examples can be outside hackers, viruses, service outages or data loss. Managing risk is necessary for preventing non-compliance, losing investors or damaging your company’s reputation with stakeholders and customers. For an accurate ROI evaluation, you must consider all the risks versus rewards of the undertaking. How likely is it that the project will go over budget, fail or open the company up to liability or security issues? Building a strong relationship with stakeholders will help you assess how technology changes will impact business processes beyond IT. Without a solid understanding of all the risks, calculating ROI will be inaccurate or involve too much guesswork.

3. Will the IT Project Drive Revenue?

Every company’s top goal is to increase profits. Consequently, almost all decisions  eventually face the question, “How does this affect our profit?” If you’re unable to show that your project will improve bottom line revenue, by driving top-line growth or decreasing costs, you risk delays or not receiving funding for critical projects. When you present a project, you cannot assume your leadership team will make the leap themselves.  

4. Convey How It Will Improve Operational Excellence & Customer Experience

Executives will often give their support to technology projects that improve operations in a variety ways. These improvements could be 1) decreasing time-to-market for products, 2) increasing order fulfillment efficiency, 3) automating manual tasks and reducing errors, or 4) increasing customer service effectiveness. If you can show the operational improvement and how it increases revenue, you’ll be speaking the language of business decision makers. Take improving operational efficiency in customer service as an example. Great customer service plays a key role in maintaining client relationships. Projects that improve customer service reduce the client churn rate and enhance top and bottom line revenue since keeping current clients costs a lot less than acquiring new ones. Additionally, word-of-mouth marketing from happy customers helps reduce the acquisition cost for new customers. This is because delighted customers who become brand ambassadors are more likely to talk about your products and services on social media, or with friends and family. According to Nielsen, people are 4x more likely to buy when referred by a friend.

It’s likely that you’re competing against several other projects for budget and attention from your leadership team. Show your CEO and CFO that you’ve carefully thought through the risks, revenue, costs and total ROI. This will help them get excited about your project by making it easy to see the impact it will have on overall business goals. Aligning your project’s value with top level concerns for members of the C-suite will greatly increase your ability to get your initiative to the front of the line for approval.

Check out 3 Tips for Effective IT Leadership in a Changing World for more on how IT leaders can stay relevant in their industry