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5 Steps to Evaluate — and Terminate — an IT Investment

5 Steps to Evaluate — and Terminate — an IT Investment

As CIOs plan for 2021 and beyond, it’s crucial to find a careful balance of IT investments. But when should you put a stop to an IT investment that is a burden on the company, either fiscally or through additional resources and support? InfoSystems leader, Robert Goodwin, Vice President of Engineering Services, shares his perspective on how to evaluate and pull the plug on an IT investment. 

1. Consider business processes. There are many reasons a company may bring expenditures into question. In many cases, businesses begin this process simply by evaluating cost — but the best way to approach a decision to continue or cancel a particular solution, IT or otherwise, is to evaluate your current and future business needs and goals. This will make it easier to determine if an IT solution is supporting those goals or hindering them.

“Reviewing business needs and processes will help leaders quickly find IT investments that may not be providing the needed value to the business,” Goodwin says. “The investment may no longer be relevant, or support for a solution may no longer be available. The program simply may be too costly to maintain.”

2. Evaluate effectiveness. Once an IT solution has been identified as one that may need to be terminated, Goodwin recommends CIOs carefully evaluating its effectiveness. When a solution is no longer providing the expected ROI or value for the business, it becomes a financial drain. 

“A business case analysis needs to occur to determine if the IT investment is still needed,” Goodwin says. “If the need is still there but the solution isn’t working well, then a new IT investment with a stronger ROI should be selected and implemented. If the business need for the investment is no longer required, terminate the IT investment.” 

3. Consult. Before terminating a solution, IT leadership should first consult with the investment owner to verify whether or not the need is still there. Then IT leadership should consult with the business executive leadership team and the financial team to discuss what the business impact of continuing or ending the IT investment would be. 

4. Execute. Once the decision is made by the executive leadership team that an IT investment will be terminated, developing a well-defined, phased approach is the safest way to terminate an IT investment. 

“You will want to avoid the urge to drop the investment immediately, as this could have a long-lasting, negative impact on the business,” Goodwin says. “A sudden termination of an IT solution could leave broken business processes, negative impacts on company data, or loss of productivity.”

5. Repeat. Even after careful consideration, it’s important to note that not every scenario will have a clear signal about terminating or maintaining an IT solution. As Goodwin says, there are instances where it may be difficult to realize if an IT investment should be ended. 

“It’s important to continuously evaluate your IT solutions. A solution that was called into question but remained in place last quarter may become obsolete by the end of the next quarter. By having a regular process for evaluating your business’s IT solutions, you’ll be far less likely to unintentionally maintain a solution that is no longer working for your business.”

Robert Goodwin, Vice President of Engineering Services

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