Several years ago, we were in meetings whereby multiple Information Technology (IT) projects were being assessed and compared. As was typical at that time, each operational project was characterized with strategic, tactical, and, financial impact metrics. The first two were very much experienced-based metrics where the senior managers brought years of insight to bear. The last metric, however, was based on the current spend, project cost, and the future spend.

Unfortunately, future spend was, more often than not, presented in terms of productivity improvement. Automation, process improvements, outsourcing were stated in terms of cost savings related to labor reduction. Very little work was done to show the mechanics of either the current spend or the future spend.

What was needed was a way to easily describe the current state in terms of organizations, resources and work and then relate it to one or more future states. But how should we represent what is accomplished in the current and possible multiple future alternatives? And how should this representation be cost tied to the various organizations and to the various delivery processes?

Our (eventual) solution was to capture the characteristics of the typical operational environment in order to:

One should recognize the above as an extended, rate-based ABC (activity based costing) set of properties.

The implemented solution uses well known technology and programming techniques:

The resulting software models the operational environment using familiar objects. The two views, top-down and bottom-up, network-wise and hierarchically cover the work performed and, therefore, provide cost credibility by each view cost summing to the same value. This is explained in the image below.