REJ - 1 REJ from Microsoft Chris Gibbs November 5 th, 2007 MBA 731

REJ - 2 What is REJ? Microsoft Rapid Economic Justification (REJ) Guide Designed to look at ROI faster than a traditional ROI study Allows completion of the project assessment process in two to four weeks Assists in planning by establishing benchmarks to identify which IT investments make sense Helps focus on the business aspects of a vision, assisting in identifying the stakeholders, the key measurements of success, and the alignment of processes to be improved by mapping them to critical success factors More than 2,000 REJ projects have been conducted by organizations around the world since 1997

REJ - 3 REJ Concepts The REJ framework provides: –Process: Step-By-Step Approach –Tools and Content: REJ Workbook in Excel, ROI and TCO calculators; data, research papers, reusable evidence, documented patterns, etc. –Deliverables: Templates, courseware, videos.

REJ - 4 REJ Usage – Where and When Environments where business conditions change rapidly Traditional ROI cost or time prohibitive “Pretty close” is sufficient accuracy Lack of long term attention by stakeholders Scenarios where there is no effective way to obtain the data needed to assess the benefits of a specific IT initiative

REJ - 5 REJ Trigger Points Fiscal year planning Synchronization with line of business activities Competing for best use of scarce resources Emerging technology recognized Transparency for relevance in portfolio Lack of executive sponsorship

REJ - 6 REJ Project Initialization Planning an REJ project includes the following work: –Assess how the final financial decision will be made –Communicate with each potential stakeholder –Identify the desired structure of the final deliverable for all stakeholders –Set expectations for REJ project activities –Identify required resources –Plan the REJ kickoff meeting

REJ - 7 REJ Phases

REJ - 8 Sample Activity: Identify Key Performance Indicators Task 1: Identify the KPI that is essential for each stakeholder to achieve his or her mission. Task 2: Identify KPIs that represent the current and desired states. Then conduct a gap analysis that identifies the order of magnitude of what the IT initiative must accomplish to meet the desired state. Task 3: Verify that the IT initiative is aligned with selected stakeholders.

REJ - 9 Sample Activity: Identify Key Performance Indicators Inputs –Does the organization have a balance scorecard? –Does the stakeholder have a dashboard? –What is in the monthly or quarterly report that the stakeholder provides to the organization? –Does each specific KPI directly map to the appropriate CSF and stakeholder? –Is the KPI measurable? –Does the stakeholder have current-state benchmarks for each KPI? Outputs –The Business Assessment Roadmap with all KPI- related information filled in for each CSF.

REJ - 10 Sample Activity: Identify Key Performance Indicators

REJ - 11 REJ End Result Economic Justification Report consisting of –Executive Summary –Gap Analysis –Proposed Solution –Benefits Analysis –Cash Flow Projections –Risk Assessment –Financial Ratios and Decision Making Point –Appendices »Details »Sources »Assumptions »Calculation methodologies

REJ - 12 So, Why Do We Care? Economic justification provides the answer to questions that executives need to know before they approve an investment, such as: –How much will it cost to reach those benefits? –Has anybody optimized this project from a ROI point of view? –How soon will the business sponsor see the effect on the business activities and processes? –How does this investment compare to other ways we can use our capital? REJ helps IT managers identify targeted business benefits that justify the use of resources and the risks during change

REJ - 13 Alternate Approaches to REJ Traditional ROI –REJ doesn't consider heavily the time value of money –REJ attempts to quantify issues difficult to account for in a ROI study, such as reduced time for developing marketing collateral and enabling better communications Gartner’s Total Value of Opportunity (TVO) –Used to develop sophisticated ROI assessments –Links IT capabilities to business performance improvements –Assists in measuring the impact of IT projects –Establishes 36 metrics that best measure revenue gains, cost savings or other value generated

REJ - 14 Sources “Build an airtight business case for new IT Adjustments” Microsoft. 12/12/ “Rapid Economic Justification Guide” Microsoft e0e2628/REJ_Enterprise.pdf e0e2628/REJ_Enterprise.pdf “Rapid economic justification service” Fujitsu. “The ABCs of ROI” Curtis Franklin. April 29, “Use this cost/benefit model to prove IT value to clients” Rick Freedman htmlhttp://articles.techrepublic.com.com/ _ html “Gartner Total Value of Opportunity” Gartner.