Profit Realization in IT projects

Profit Realization in IT projects
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Profit realization in IT projects is a critical aspect of any business venture. The success of an IT project is not just measured by its completion on time and within budget, but also by its ability to generate revenue and return on investment (ROI) for the organization. By focusing on profit realization, organizations can ensure that their IT investments are delivering the desired returns and are contributing to the overall success of the business.

McKincey Digital states that on average, large IT projects run 45 percent over budget and 7 percent over time, while delivering 56 percent less value than predicted.

While there are many factors that can contribute to the failure of IT projects, a lack of focus on profit realization is likely to play a role in many of these cases. Ensuring that profit realization is given the necessary attention and resources is an important step in the successful delivery of IT projects.

However, realizing profits from IT projects can be challenging, and it requires a structured approach to ensure that all the necessary steps are taken. To help organizations successfully realize profits from their IT projects, here is a five-step framework:

  1. Identify profit objectives: The first step in profit realization is to clearly identify the objectives of the project. This should include both financial and non-financial objectives, such as increased productivity, improved customer satisfaction, and reduced costs.

  2. Create a profit realization plan: Once the profit objectives have been identified, the next step is to develop a plan for how they will be achieved. This plan should outline the steps that need to be taken, who is responsible for each step, and how progress will be measured.

  3. Identify barriers to profit realization: There may be challenges related to technology, people, or the organization that could hinder profit realization. Identifying these barriers and developing strategies to overcome them is an important step in the process.

  4. Implement the profit realization plan: Once the plan is in place, it's important to execute the steps outlined in the plan to ensure that the project is delivered in a way that maximizes the profit potential.
    If it turns out that the profit realization plan does not produce the desired result, it may be necessary to adjust it to ensure that the profit targets are met.

  5. Measure profit realization: Use tools like Key Performance Indicators (KPIs) to track progress against the profit objectives and ensure that the project is on track to deliver the desired results.

By following this framework, organizations can increase their chances of realizing profits from their IT projects and ensure that their investments are delivering the desired business value.