January 12, 2004

Departmental of Commerce Information Technology

Capital Planning and Investment Control Process:

Operating Unit Responsibilities

Each operating unit of the Department must implement a three-phased Information Technology (IT) Capital Planning and Investment Control process under the authority of its Chief Information Officer (CIO) addressing IT investment selection, control, and evaluation. This process recognizes that there are significant differences in mission and size among the operating units that make up the Department and anticipates that different implementation approaches for IT capital planning and investment analysis will be warranted across operating units. The larger operating units, including the National Oceanic and Atmospheric Administration, Census Bureau, National Institute of Standards and Technology, and International Trade Administration, should each establish a formal IT Investment Review Board to implement the process within their respective operating unit.

Each operating unit may define different levels of evaluation within their IT Capital Planning and Investment Control process based upon the relative importance, magnitude, and risk of the investments. In defining the different levels of evaluation, operating units should assume that the Commerce IT Review Board (see CITRB charter at http://ocio.os.doc.gov/CommerceITGroups/Commerce_IT_Review_Board/DEV01_003902) will have special interest in certain types of investments such as:

• investments that merit special attention due to political sensitivity, mission criticality, risk potential; or
• Department-wide or inter-operating unit investments; or
• those with life cycle cost greater that $25 million; or
• investments that deviate from cost, schedule, or performance goals.

Each phase of the process must include the following attributes to ensure successful results:

PHASE I - IT Investment Selection For New Initiatives:

The IT Investment Selection Phase should consider the investment portfolio (new, operational, and under development) and include processes to:

• evaluate IT investment proposals, analyzing risks, benefits, and costs;
• prioritize new investments based on program priority, risk, and return;
• make investment decisions and establish the review cycle; and
• forward the most promising proposed investments to the Commerce IT Review Board for consideration in the annual budget review.

Critical success factors for the selection phase are:

• a team that includes executive program managers, the Chief Information Officer (CIO), Chief Financial Officer (CFO), the Chief Executive Officer (CEO), and/or Chief Operating Officer (COO), and makes investment decisions based on the value to the organization as determined by comparisons and tradeoffs among competing investment proposals;
• documented and quantifiable decision-making criteria that examine expected risk-adjusted return on investment, technical risks, improvements to program effectiveness, performance measures, and customer impact;
• assessment of the current and target architecture including development investments and the existing technology environment as they relate to proposed investments;
• pre-defined thresholds and authority levels for channeling investment evaluations and decisions to appropriate management levels to accommodate organization specific versus operating unit needs; and
• availability of the correct management skills and project management discipline for successfully completing the investment, including a performance measurement system.

PHASE II - IT Investment Control For Investments Under Development:

The Control Phase should include processes to:

• identify problems and monitor investments against benefits delivered, established costs, scheduled milestones, and performance measures;
• identify alternatives to correct deficiencies and take appropriate action; and
• recommend investments for further review by the Commerce IT Review Board.

Critical success factors for the control phase are:

• regularly scheduled investment reviews that involve senior management and the CIO, CFO, CEO, and/or COO, and result in decisive action to solve problems and approval/disapproval decisions on investment continuance;
• solutions to problems that are considered the province of both program officials and the CIO and result in documented management decisions including information supporting required changes;
• explicit measures and data used to monitor expected versus actual investment outcomes on cost, schedule, and performance that are consistently maintained throughout the organization and readily accessible;
• a positive environment for raising current or potential investment problems that warrant management attention and action; and
• an effective management methodology for investment development.

PHASE III - Evaluation of Operational Investments:

The Evaluation Phase should include processes to:

• conduct post-implementation review of all major investments that focus on identifying the cause of discrepancies between anticipated versus actual results in terms of cost, schedule, performance, and delivered benefits to mission improvement, and make recommendations to continue or consider alternatives to the operational investment;
• use lessons learned as a result of post-implementation reviews to improve the existing investment selection and control processes; and
• recommend investments for further review and edification of the Commerce IT Review Board.

Critical success factors for the evaluation phase are:

• actions taken on evaluation recommendations; and
• documented lessons learned.