Step Six

Identify risks if project goals and deadlines are missed

“What If” Risk Assessments

The more significant and important a software project might be for a company, the more time should be spent on identifying and assessing its associated risks.

The risk assessment questions to be explored might be: What happens if the decision to begin the project is put-off? What happens if the project start date is delayed? What happens if the project goes over budget? What happens if a go-live target date is missed? What happens if there is project scope creep? What happens if the project is cancelled? What happens if key members of the project team leave or are reassigned? What happens if the project’s goals are met early resulting in sooner than expected business changes?

For each of these questions, one may need to consider both the positive and negative risk impacts of (1) any changes to a company’s financial plans or fiscal budget; (2) any changes to other internal operational initiatives or programs; (3) any changes to mandates imposed by strategic business partners, or by regulatory agencies; and, (4) any overall changes felt by exceeding, meeting, or ignoring competitive market pressures.

The Decision Risk of Now vs. Later

For complex and/or perceived expensive software projects, companies sometimes struggle with making a business decision to move forward, or even when to start a project. The term “paralysis by analysis” is commonly used in these situations. This may be understandable since everyone wants to make a correct and affordable decision for the right business reasons; but, sometimes specific answers, or a project’s impact on business, may not be fully understood, appreciated, or known until one gets deep into the discovery, design, and integration planning aspects of a project. So, how does one decide when and what to do next?

As is often stated, the only true business constant is change. And, business change is always inevitable. One may ask then, how long can inevitable change be put off? Can legitimate business risks and costs be better mitigated and managed today, or could they be put off until tomorrow? Is there a balance point in between? The real business decision factor may come down to a discussion on moving forward now or moving forward later. Companies, with similar project needs and requirements, may follow completely different paths and make completely different decisions, all for equally valid reasons.

One critical financial consideration, worthy of closer examination in decision discussions, concerns the real impact of a project’s calculated return on investment (ROI). As previously noted, ROI is often expressed in terms of time; and, it can be calculated as a monthly savings figure. It is important to factor in decision discussions that for every month that a project decision is put off, delayed, or deferred, the calculated monthly ROI savings figure will forever be lost, never to be attained or re-captured.

To illustrate the financial ramifications, suppose a calculated monthly ROI saving figure is $15,000. A project decision delay, or a project start pushed out six months into the future would mean that an estimated savings of $90,000 would be lost forever (6 x $15,000 = $90,000). For many companies, this potential ROI savings figure could represent a significant financial number that is difficult to ignore; and, the larger the project might be, the larger the potential ROI saving that could be lost.

Accordingly, for many companies, finding the quickest path forward to enable ROI savings can become a primary motivating factor to start a business project sooner rather than later.

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