As retail sales stall amidst the US economic downturn, retail IT leaders will be forced to ruthlessly prioritize IT projects and curtail spending. This is never an easy or enjoyable process, but it will be necessary for the next year or two. Determining how to prioritize IT spending is the trick, and there are a few different methods for prioritization. Pick the most appropriate prioritization process, and start working on the IT priorities list.
Method 1: Return on Investment
Using ROI to prioritize IT projects is likely the most commonly used method, and the easiest to sell to senior management. Establishing the two or three-year ROI of each significant IT project makes it much easier to rank projects in terms of importance. It becomes possible to establish minimum ROI percentages in order to make the project list. The minimum return typically comes in the form of a hurdle rate, which is usually based on a desired rate of return over the cost of capital.
