How big is your value backlog?

I often get asked about calculating the ROI for decision technologies like business rules maangement systems.I suspect I will post lots of entries on this topic over the coming weeks and months but I wanted to focus on one particular aspect of ROI calculation that I think is often overlooked - your "value backlog".

Most IT departments have a backlog - the list of projects that are not being worked on due to a lack of time and resources or to higher priorities being assigned to other projects. If your IT department doesn't then please feel free to stop reading now. Assuming your IT department does have a backlog then someone has probably estimated the potential business value of the projects in this backlog. Most projects don't even make it to the backlog unless they have a positive potential - that is the business value of the project exceeds the cost of the project. What this means is that magically completing all the projects on your backlog would add tremendous value to your business - your "value backlog".

Now there are lots of reasons why organizations have a value backlog but one of the most persistent is the fact that a huge percentage of IT resources are spent on systems maintenance - one Forrester analyst talked about companies spending 75%+ of their software budget on maintenance, for instance. If you're spending all that money on maintenance then no wonder there's an application development / improvement backlog! But what if you could start building new systems, or modifying existing systems, in ways that would reduce your maintenance burden? Then you could reassign these maintenance budgets to new development work and start turning your "value backlog" into value. It is this aspect of ROI that I often see neglected - companies try and consider the Total Cost of Ownership for new systems but they don't account for the additional value in other projects that could be completed if the new system was easier to maintain.

One way to make new systems easier to maintain is to use Business Rules Management Systems to automate the business logic in those systems - this is the part of the system that never seems to stablize. If the business users can change these rules for themselves then IT can go off and generate some value.

There's a lot more on this on my Enterprise Decision Management blog under Business Agility.