Evaluation of the New It Projects Prioritization Process in Volkswagen of America

Name: Sayed Anwer Shah ID: 9697

Evaluation of the new IT projects prioritization process in Volkswagen of America

Background

The problem facing Uwe Matulovic, Chief Information Officer at Volkswagen of America, a U.S.-based subsidiary of VWAG, is how to fund IT projects with a limited budget. Traditionally, the company had relied on unstructured debates at the senior management level to address issues of this nature (i.e. allocating budgets for various projects). However, in order to make this process orderly and more efficient, the company’s leadership introduced a new process for prioritization of IT projects. With the help of this new system they ranked the projects that needed funding in order of their decreasing relevance to the company’s goals. The projects with the highest priority would receive funding whereas the funding for the less important ones would either be reduced or delayed until a later time. But deciding which the right projects to fund first were and which projects could be funded later or funded partially were the questions Matulovic had to find an answer to.

Evaluation of the New IT Projects Prioritization Process

As mentioned earlier, the new prioritization process gave precedence to projects directly related to the enterprise goals while delaying or partially funding the other projects evaluated to be less relevant to these goals. While it is true that the new prioritization process is better than the old one in several ways, on a closer examination one can find many flaws in it.

One of the flaws in the new process is the budget constraint. Management decided on the budget for the projects before they looked at the proposals. As we can see in the case that the budget requirement for the projects was initially estimated to be $170 million. However, the budget that was made available for the new projects was only $60 million. What this meant for the company and the business units in particular was that many important or urgent projects could not be implemented due to lack of budget funds. As much as it is understandable that projects need to be limited to meet financial goals, some degree of flexibility always comes in handy to adjust for underestimation and adaptation.

Lack of consideration for the global goals of Volkswagen is another reason I consider the new process flawed. For example, the Supply Chain IT project which is believed to reduce costs substantially and produce global positive effects would not be fully implemented due to lack of proper funding. This shows that the ranking