Top management support is crucial in the choice of IT investment
The growing demand for IT investment led Ferrero group to set up an ‘IT investment Committee’ to assess the IT project portfolio and set priorities on attainable goals.
The CEO of Ferrero Group was central in implementing IT project portfolio assessment. The issue of how to assess and prioritise IT investment became particularly pressing in 2003- 2004 with the challenge of implementing a single ERP for the entire group. The growing demand for IT projects prompted the Ferrero board to think in terms of portfolio, fuelled by the demands of business and the technological tools available. It set up an ‘IT Investment Committee’ to head up a ‘mechanism’ to assess the project portfolio and define priorities for requests.
The Committee is composed of the Director of Operations, CFO, CIO, human resources managers, the supply chain and geographical business units. The requests are classified into thematic project clusters (for example, compliance, operational, efficiency projects, etc.). They are then ranked according to four criteria defined by the Ferrero board: risk, cost, benefit and alignment with business priorities.
A central team of senior IT and finance managers evaluates the requests. If the project is part of the IT portfolio, the team checks its compliance with the criteria of alignment with business priori- ties and planned organisational changes, risk profile at a standard level, consistency with IT budgets and sustainability according to available resources.
Once filtered, the portfolio of IT initiatives goes to the ‘IT Investment Committee’ for final decision. It is periodically updated to include new projects, upgrades or downgrades. Last year the ‘IT Investment Committee’ approved only 30% of the overall IT investment required by business. The results are satisfactory, especially if measured in relation to the business plan and the necessity to contain the entire Ferrero Group’s IT spending.