IT due diligence: why you need a checklist

Checklists stop technology projects and planes crashingWithout checklists, pilots crash planes and ER doctors infect you. Read The Checklist Manifesto by surgeon-professor-writer Atul Gawande, if you don't believe me.

Yet business and IT managers often muddle through technology due diligence without a checklist. Given the mantra of all good developers -- DRY or don't repeat yourself -- this is ironic. Instead, when making technology investments, ad hoc decisions, repetition and rework are typical.

Rigorous IT due diligence is much easier with a checklist. It will reduce errors, help you make faster, better decisions, and increase IT value. Here are the 7 reasons why:

Sets a minimum standard

A checklist sets out the minimum expected steps for a process. Getting those steps right takes work and research. Effective checklists are fact-based and derived from culling through lots of evidence of what works and does not work.

For any IT investment, there are 12 minimum questions that must be answered. The first 4 questions are:

  1. What is the business need?
  2. What is the investment that addresses the business need?
  3. What technology underlines the investment?
  4. What are the benefits of the investment?

Learn more about the 12 fundamantal IT due diligence questions in The Business Case Checklist.

Screens out bad projects

Every project is afflicted by optimism bias. Momentum builds as project managers and stakeholders get more and more involved. And vendors happily fuel the fire!

IT due diligence requires the courage to say no. Checklists encourage the sceptical "prove it" attitude, necessary for screening out bad projects.

As a warning, beware of outlandish ROI claims. Consider any forecast ROI with annual return execeeding 40% as a speculative investment. Check the assumptions and look for overstated benefits and missing costs.

Make better investment decisions

Careful, consistent application of an IT due diligence checklist will produce efficient decisions and effective investments.

Solid investment returns are more about avoiding bad investments than hopeful bets on one or two super-return projects. The more rigorous your technology due diligence the more likely your investment will produce a  high ROI.

Saves everybody's time

Checklists boil down substantial amounts of knowledge. They are the ultimate quality over quantity tool.

Before writing The Business Case Checklist I read 51 business-case-related books and worked through the lessons of a dozen years of writing and advising on IT value.

Technology due diligence checklists  not only save a lot of research time, they help you perform a task quicker. Their emphasis on conciseness means stripping out every secondary item to focus on essential criteria only.

Keeps the focus on ROI

IT professionals tire of hearing that 60% to 70% of their projects fail to deliver the forecast benefits. Irritatingly, these criticisms come from people who have not written a requirement or a line of code in their lives. Well-educated, highly trained IT professionals don't set out to produce ROI-losing investments.

Execution errors apart, the root cause is using the wrong framework or perspective.

Technology proposals are still mostly about features and functions. This is wrong. IT is always a means, not an end. And the end is improved business performance and increased profits.

Use an IT due diligence checklist and treat technology as an investment. That way, you are buying the cash flows produced by the technology -- the ROI. The features and functions simply deliver the ROI.

Enables performance improvement

A checklist lays out a standard investment process, which means evaluation criteria are streamlined and consistent. Reducing the variation in decision criteria from investment to investment makes tracking and improving performance easier.

A technology due diligence checklist records best practice and serves as a foundation for designing and building a repeatable investment process.

Learn from other industries

Checklists help solve the problems of complexity in several industries, including medicine and aviation. They offer IT professionals several lessons on the benefits of using a checklist:

  • Even "rock stars" use them. If surgeons -- the rock stars of medicine -- use checklists, then, even the most elite developer can benefit from them as well.
  • No process is too complex. Atul Gawande points out that for an I.C.U. patient to survive, 178 tasks must be done right every day. I.C.U.s cannot function without checklists.
  • Manage the unmanageable. The flying fortress plane was viewed as "too much airplane for one man to fly"until checklists were applied.
  • Saves money (and lives). Peter Pronovost developed a simple checklist for use in I.C.U.s at John Hopkins. Applied to just one hospital, this checklist has saved 2 million dollars and saved 8 lives.

With US$ 1.9 trillion spent on IT products and services across the globe every year and dissatisfaction with at least half of all IT projects, the need to apply simple, effective (and cheap) checklists is urgent.

To read more, see the The Business Case Checklist.