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The selection of preferred projects for implementation from a list of competing options is a primary concern for critical IT management issues within VW of America. This is mainly because it entails priority setting, project planning and governance, which pose significant conflicts and management challenges within most organizations. In light of this view, this paper assesses the new process for managing priorities at VW of America. The paper justifies the criticisms and evaluates whether the new process is an improvement to the old process. In addition, the paper determines who should control and fund the IT department’s budget, the problems that are likely to arise from over commitment of resources, and the plan of VW of America that might result in an excess demand for IT services.
Assessment of the New Process for Managing Priorities at Volkswagen of America
The new process for managing IT priorities will play a vital role in the formalization of governance and prioritization process because the high-level business architecture offers a means of classifying organizational activities and establishing their coherent relationships with the company’s strategy and its ability to implement the strategy. This is a notable strength of the new process because managing priorities depends on their contributions towards the achievement of the business goals and objectives of VW of America. The next strength of the new process for managing priorities is that it involves numerous organizational entities in the creation and management of a new process for managing priorities of VWoA. This is somewhat a bottom-up approach to the management of priorities. For instance, ELT has the responsibility of execution, the IT steering committee has the responsibility of guiding and approving the process of IT selection and prioritization, while the DBC categorizes the projects, assesses their business impact, evaluates their alignment with business goals and makes trade-off decisions. The overall importance of the new process for managing priorities is that it emphasizes on ensuring that projects aligned with the achievement of the company’s strategy are highly prioritized. As a result, associating projects with the goals and objectives of the company will serve to strengthen the enterprise-level case for that particular project.
The new process for managing priorities faces a significant weakness since it does not place much emphasis on individual business unit projects; rather, it focuses on their associations with the company’s goals and objectives. This increases the likelihood that business unit managers will resist the implementation of funded projects because their highly prioritized project proposals might not be funded on grounds that they are not aligned with the company’s strategy. In addition, this new process for managing priorities imposes significant challenges in terms of dropping lowest-ranked goal portfolios and unequal funding for each goal portfolio. The outcome is that it increases the complexity of trade-offs. This is especially challenging when business units proposals lack adequate enterprise value to qualify for funding, which is an avenue that business unit managers can use to challenge the effectiveness of the new methodology for selection and prioritization of projects at VW of America. There is a chance that the business unit executives will not feel that they are part of the outcomes.
When compared to the old methodology for selection and prioritization of projects, it is apparent that the new method is an improvement to the old method. This is because it compels business units’ managers to revise their priorities to match the company’s strategy. This helps in the elimination of cases associated with imposed decision-making because unit managers have to make sure that their project proposals make significant contributions towards the achievement of the entire organizational goals. The criteria for funding bases on the importance of the portfolio towards the achievement of the company’s goals, which in turn guarantees Return on Investment (ROI).
Budgets from which IT projects are funded at Volkswagen of America
The prioritization of IT projects at the VWoA is under the high-level business architecture created by the Business Process, Technology and Organization (BPTO), which is the company’s IT department. The budget used for controlling IT projects at the company is controlled by the Executive Leadership Team. Despite the fact that IT department is an independent business unit to oversee all the IT issues in the firm, it has no control over the budgets used to fund IT projects. An independent budget for the IT department is needed if it is to manage the IT projects effectively. This is because the IT department plays an integral in the selection and prioritization of IT projects, implying that controlling their own budget is needed if the funded projects are to be executed effectively with respect to time and cost, and eliminate potential cases of critical projects being unfunded.
The extra work requests at VWoA arise from lack of funding for the projects proposed by some business units because they are considered as low-ranked portfolios. The new selection method for funding projects is likely to leave out numerous projects that are perceived as of little importance in achieving the company’s goals and objectives. In addition, the selection process for managing and prioritizing IT projects can leave out highly prioritized projects at the business unit levels.
The demand for IT services at VWoA is likely to increase in future because of the need to use base-enterprise IT platform such as data warehouses, desktop productivity tools and internet-based communications; enterprise applications; and customized point solutions.
Problems associated with over commitment of resources
Over commitment of resources towards core business objectives can result in critical projects being unfunded or partially funded at the business unit case. An example is the case of the unfunded supply flow project in the company. In addition, over commitment of resources increases the probability of project failures for the cases of dependent projects.
Matulovic should respond to his fellow executives who are calling to ask him for special treatment outside the new priority management system through insisting that the selection process must be observed. Therefore, it is the responsibility of the business unit executives to ensure that their project proposals reflect the company’s strategy in order to be top-ranked and guarantee funding for their highly prioritized projects at their business units. In relation to the unfunded supply flow project, Matulovic should help the supply flow area to make an argument for financing the project from other alternatives. In addition, he could use the project as an avenue for evaluating the effectiveness of the prioritization process and subsequently revising the prioritization methodology.