Management of
Computer System
Performance
Chapter 10
Ranking and Value
Ranking and Value
Agenda

Chapter 10
Objective:

Students should be able: to apply ranking and
scoring to IT application.
2
Ranking and Scoring


The concept of Ranking and Scoring IT
Systems as a basis for strategic decision
making is recognized by most firms as a
valid approach.
This approach involves creating a matrix of
projects, a value criteria, their associated
weights and then calculating the benefit of
the project.
3
Ranking and Scoring

It is assumed that each of the variables
(Value, weight and benefit) will be applied
using set standards against each project.
Ideally, those standards would be used for
Ranking and Scoring all projects without
significant changes over time (excluding
business environment issues).
This approach to IT evaluation is usually used on
similar projects or activities.


4
Ranking and Scoring




They have similar NPV, IRR (ROI) values. The
financial analysis results in a general “tie”.
The projects have similar collective benefits and
usually all of the projects are needed by some
group within the organization.
It is not clear which is the “best” solution to
undertake.
The conflicting needs make it difficult select the
solution that offers the greatest benefit to the firm.
5
Ranking and Scoring

The general approach to ranking and
scoring projects is as follows:

Identify the criteria's against which the
projects can be measured.

Use a balanced approach and try not to
skew the end result by creating criteria's
that are clearly biased against one type of
project or another. If you could do this
legitimately, you’d already have the
answer.
6
Ranking and Scoring

Identify the weights of each criteria.

Use a corporate standard that can equally
apply to each criteria regarding its
importance. Keep it balanced.

Score each project on how they meet the criteria.
Use a percentage. A valuation based upon 10%
increments is usually recognized as being
appropriate. (Score them on a ranking of 1 to 10,
etc.)
If you use multiple criteria, score each according to
the same standard.


7
Ranking and Scoring


Multiply the weight and the score for each
criteria, add the criteria together and select
the option with the highest score(s).
Ranking methodologies are not easily
found. Get a team of stakeholders together
and work through it. Let them argue of their
respective projects values.

Do it solo and become a lightning rod!
8
Ranking and Scoring

Some criteria that are often used are as
follows:

Strategic Value to the corporation


Does it assist the company in meeting its strategic
goals?
Critical Value

Is it needed to help the firm survive. Usually viewed
as more of a short term project. (We just got a huge
order. How do we manage the inventory without an
Inventory Management system?)
9
Ranking and Scoring

Operational Value


Architectural Value


This is more of a planned solution. (We’re growing
and we need to implement an Inventory
Management system.)
This type of project will often establish a better basis
for future IT projects. (The network is a kludge of
Banyan, AppleTalk, Novell and TCP/IP. This will
standardize on TCP/IP)
Investment value

Usually should include with secondary benefits in
that the original ROIs were similar to begin with.
10
Ranking and Scoring


Risk Assessment
 This associated with the technical and financial risk. A
Risky project gets the lower score.
The Ranking and Scoring method can be effective
if and only if the scoring is done in an open manner
and the criteria are not inherently skewed towards
one project or another.


If either of these elements occur, save time and use
another method to evaluate the project.
From an economic perspective, this is a tie breaker
methodology,
11
Summary

Ranking and scoring associates numeric
values to aspects of the project.

Supports comparative analysis between
projects.
12
Individual Paper Due

Pick one of the Enterprise using IT as part of
its operational system and give an analysis
using the spreadsheet given on the text bookpage 211, fig. 101. and fig. 10.2
13