Propose Model of IT Project Selection and Prioritization:
Study Case - Bank Indonesia
Mirza Arie Andini Permana and Apol Pribadi
Institute of Technology Sepuluh Nopember, Surabaya-Indonesia
Keywords:
Project Selection, Project Prioritization, IT Project Selection, IT Project Prioritization.
Abstract:
The abstract should summarize the contents of the paper and should contain at least 70 and at most 200 words.
It should be set in 9-point font size, justified and should have a hanging indent of 2-centimenter. There should
be a space before of 12-point and after of 30-point.
1 INTRODUCTION
At present information technology (IT) is experienc-
ing very rapid development where its development is
unavoidable. The development of this information
technology, not only can help our way of life be-
come more modern in everyday life, but the devel-
opment of current technology also supports the busi-
ness world. The use of IT is an essential factor in
achieving company goals thereby increasing the com-
pany’s IT needs. The company’s IT needs that con-
tinue to grow indirectly result in increased corporate
spending for investment in the Information Technol-
ogy sector or commonly referred to as IT spending. IT
investment capital is higher than investment in other
fields(Yorukoglu, 1998).
On the other hand, some research evidence that
the amount of IT investment isn’t balanced the ben-
efit or the contribution of IT to the enterprise. Thus
giving rise to the views of IT Skeptics stating that it is
estimated 68% of the company’s projects do not run
on time or budget, and after working on the project
does not provide support for business objectives as
promised(Jeffery and Leliveld, 2004). The views of
IT Skeptics is confirmed by IT Paradox theory, which
shows that the benefits of IT cannot be measured in-
deed (Brynjolfsson, 1993). The company has limited
resources, knowledge, and capabilities, so the selec-
tion of technology or IT projects is essential for man-
agement. The choice of the right resources derived
from dominant resources owned and controlled by the
company determines the level of success of the contri-
bution of information technology used to the achieve-
ment of company goals(Subriadi, 2013).
Companies need to set priorities given that IT in-
vestment will have an impact on companies when
companies invest and also need to find ways to en-
courage companies to achieve faster business goals
to overcome IT paradox(H. Lee., 2016). Therefore
it is necessary to do the in-depth analysis before de-
termining the IT investment due to the accuracy of
IT planning and development is an essential key for
the company’s competitive advantage(Wen and Shih,
2006) (SUBRIADI et al., 2013).
The same problem also occurred at Bank Indone-
sia. Bank Indonesia has a vital role in state finance.
Therefore, having a superior performance is a com-
mitment to Bank Indonesia. Every year, BI receives
many projects to be realized, but BI has limited re-
sources. For BI to be able to choose which projects
must be achieved is a challenge.
In the case of research objects, management needs
to carry out the process of selecting and prioritizing
IT projects to facilitate the selection of IT projects
and ensure that IT projects realized will support the
achievement of the company’s business objectives.
Making a good selection of projects can significantly
improve an organization’s ability to execute strategies
and improve results. Therefore, the purpose of this
study is to develop a model that supports the selection
and prioritization process in research objects. that
need to be improved, look for practical examples re-
lated to the implementation of these processes in var-
ious other organizations, and implement frameworks
related to prioritization processes as a reference for
improvement. The results of the study are a model of
IT project selection and prioritization.
40
Andini Permana, M. and Pribadi, A.
Propose Model of IT Project Selection and Prioritization: Study Case - Bank Indonesia.
DOI: 10.5220/0009857700400047
In Proceedings of the International Conference on Creative Economics, Tourism and Information Management (ICCETIM 2019) - Creativity and Innovation Developments for Global
Competitiveness and Sustainability, pages 40-47
ISBN: 978-989-758-451-0
Copyright
c
2020 by SCITEPRESS Science and Technology Publications, Lda. All rights reserved
2 PROJECT SELECTION
FRAMEWORK
Project selection is a strategic decision because it
must be aligned with the organization’s business strat-
egy to ensure the maximum return of a selected port-
folio. Selection and priority processes are carried out
among many alternatives to ensure that the project
chosen is right is a complex issue, which requires
clear and definite criteria. Various literature states that
there are more than 100 techniques that can be used
by organizations to support the selection and priori-
tization process in their project portfolio. In general,
organizations will use more than one method but a
set of techniques and tools that are appropriate for
their organization(Cooper et al., 2001). Because of
the variety of techniques that can be used, organiza-
tions or companies need to adopt or develop a frame-
work or integration between processes and methods
and tools[9]. Although the project portfolio selection
process is considered very important, it has not yet de-
veloped as a series of clear and formal project selec-
tion processes(Pennypacker and Dye, 2002). Many
researchers and practitioners are aware of these short-
comings and are interested in conducting research and
developing a framework or process integration with
specific techniques and tools. Referring to the results
of the previous study(Le and Nguyen, 2008) which
states that each framework has its advantages and dis-
advantages, and makes a clear contribution to project
selection in the organization.
2.1 Integrated Framework for Project
Selection by NP Archer dan
Ghasemzadeh (1999)
Integrated framework for project selection is a frame-
work developed by (Archer and Ghasemzadeh, 1999).
Unlike other frameworks, this framework supports the
portfolio selection process explicitly and focuses on
procedures and the use of tools and methodologies
that help project selection. This framework consists
of several stages which can be seen in figure 1.
Each stage in the framework will achieve sev-
eral objectives and produce input for the next several
steps(Archer and Ghasemzadeh, 1999). Archer de-
fines the framework to be a Process Stage, Selection
Stage, Activity, and Potential Methodologies, which
facilitates the process of adopting the framework.
Figure 1: Integrated Framework for Project Selection
2.2 Framework by Project Management
Institute
The PMI (Project Management Institute) is a
portfolio-related standard known as good practice re-
lated to the implementation of portfolio management.
This standard is a complement to the Project Manage-
ment Body of Knowledge (PMBOK)(Institute, 2008).
Figure 2: Portfolio Management Process
The standard developed by PMI divides portfolio
management into seven stages, namely:
1. Identification: At this stage, information collected
regarding the project that is already running and
the list of proposed projects.
2. Categorization: At this stage, the classification of
each project is carried out into several categories
based on the strategic plan.
3. Evaluation: At this stage, the review of each
project is carried out based on predetermined cri-
teria.
4. Selection: This stage is an essential process in
compiling a list of projects that have gone through
an evaluation process and are ready to be input in
the prioritization stage.
5. Prioritization: The main objective of this process
is to determine the ranking of each project in a
particular category of strategy or financing, in-
Propose Model of IT Project Selection and Prioritization: Study Case - Bank Indonesia
41
vestment time frame, the risk versus return profile,
and organizational focus.
6. Portfolio Balancing: The purpose of this stage
is to produce a portfolio by compiling projects
that have the best potential to support the organi-
zation’s strategic initiatives in achieving strategic
objectives.‘
7. Authorization: The main aim of this process is
to formally determine the financial and human re-
source allocation of the company to develop busi-
ness cases or execute projects and to communicate
the results of portfolio balancing decisions.
In applying the standard, Government Investment
in China found that the stages in the rule could not fa-
cilitate strategic objective correlation with the project,
so they added one step in the standard, namely the
Identify The Government Strategic Objective stage
(Yu et al., 2008).
2.3 Framework by Cooper
Cooper compiled a selection framework consisting of
2 levels. The first level is the level for determining
decisions related to the strategic portfolio (strategic
bucket) or strategy mapping. The second level, known
as the tactical level portfolio, will use different tech-
niques. At this level, it can use stage/gate techniques
and complementary PPMs.
Figure 3: Process hierarchy in project selection by Cooper
2.4 Framework by Englundan and
Graham (1999)
The framework developed by Englund and Graham
is a framework that refers to the ’mental decision-
making process’ approach. This approach has a
different concept from the framework developed by
(Archer and Ghasemzadeh, 1999). In figure 4 shows
that the framework by (Englund and Graham, 1999),
which divide into four stages consisting of:
1. What the organization should do
2. What the organization can do
3. Analyze and decide on a project
4. Implement the plan
Figure 4: Framework Englund and Graham
3 RESEARCH METHOD
3.1 Framework Analysis
In general, each stage in this framework is similar to
other frameworks. However, the framework is more
focused on the management portfolio, not the project
selection and prioritization process. (Le and Nguyen,
2008) states that each framework has its advantages
and disadvantages, and makes a clear contribution to
project selection in the organization)(Le and Nguyen,
2008) . In general, there are no differences or con-
flicts from the frameworks described. However, each
framework has different perspectives and approaches.
Based on the exploration framework conducted
by (Archer and Ghasemzadeh, 1999), An integrated
framework for project selection was chosen as the ba-
sis for modeling. The following are descriptions of
reasons that support the selection of the framework:
1. The framework is developed based on a decision-
making process that helps decision-makers in
making decisions and is different from other
frameworks
2. It is a framework designed with specific objectives
in project selection
3. Compiled with flexibility, both activities, tools,
and methodologies used to be tailored to all types
of organizations and projects that are relevant to
applicability across organizations
Integrated Framework initiated by NP Archer will
divide each job into several stages, and each stage will
show certain achievements and will generate input for
the next stage. These sequential stages will assist the
decision-maker in carrying out project selection with
sequential logic to support decision making. This
framework has three main phases; strategic consider-
ation (helping to guard the strategic focus and overall
ICCETIM 2019 - International Conference on Creative Economics, Tourism Information Management
42
budget of the project), individual project evaluation
(evaluating projects independently of other projects),
and portfolio selection (project selection that refers
to project parameters, inter-project interactions, re-
source constraints, and other dependencies).
In developing this framework, NP Archer and F
Ghasemzadeh prioritize flexibility for each organiza-
tion in implementing this framework to suit the needs
of the organization but still provide direction in its
stages to support the process flow. Based on the
analysis conducted, found several problems, namely:
(1) The naming of less representative stage of selec-
tion. The naming of stages in the selection and pri-
oritization process in the Integrated framework for
project selection is so common that it is difficult to
understand and does not represent the activities in the
stages. (2) This framework was developed in general
to facilitate the process of project selection and priori-
tization without reference to specific projects or types
of organizations. The result is an explanation of the
activities to be carried out therein are also generally
classified. (3) In its framework, Archer includes a
potential methodology to be applied by the company.
However, the use of methodology is closely related to
corporate preferences of what methodology is easy to
use and by its experience and culture.
3.2 Existing Conditions on the Research
Object
Implementation of the selection and prioritization
process at the research object is implemented in
the IT Steering Committee mechanism. Information
Technology Steering Committee isan administrative
comity that serves to conduct review, supervision, and
prioritization of IT projects. However, its application
to the research object is still experiencing problems.
Figure 5 is a summary of the issues that occurred in
the research object:
3.3 Design Model
Model compilation refers to the stages in the Inte-
grated Framework for Project Selection. This ar-
rangement is done by describing every step in the
framework and adapted to the present condition in the
research object as well as the result of the study of lit-
erature and empirical study. Here is a description of
each of these steps:
1. Pre-Screening
Pre-screening is the initial stage of the project se-
lection and prioritization process. What needs to
be done at this stage is to ensure that the projects
Figure 5: Table problem selection and prioritization in re-
search object
developed are in line with the focus of the port-
folio strategy. One technique that can be used in
strategy mapping is a strategic bucket. A strate-
gic bucket is one technique to ensure the suit-
ability of the strategy with a top-down approach
that maps each project into which strategy it sup-
ports(Cooper et al., 2002). Activities in this stage
include:
(a) Mapping of strategy
Mapping of strategy is an activity to ensure
that the project developed has alignment with
the company’s business strategy. Some tech-
niques can be used for mapping of project strat-
egy with business strategy, IT strategy, and pri-
marily focus from IT portfolio, among by clas-
sifying IT project proposals with each of these
strategies. An example of a technique that can
be used is a strategic bucket that will classify
each project based on which strategy it sup-
ports.
(b) Project Elimination that is not following the
strategy
At this stage, projects that do not fit the strat-
egy or focus of enterprise IT development was
eliminated. With these eliminations, it can re-
duce the burden of the number of projects that
will go through the selection and prioritization
process.
(c) Determination of criteria
An essential activity in this stage is to deter-
Propose Model of IT Project Selection and Prioritization: Study Case - Bank Indonesia
43
mine the parameters or criteria used in assess-
ing the project. The use of these criteria will
be scattered in the Individual Project Analy-
sis, Screening, and Optimal Portfolio Selection
steps tailored to the needs of each stage.
2. Individual Project Analysis
In individual project analysis, individual project
appraisal is conducted to find out the clarity and
quality of the project in supporting the achieve-
ment of corporate strategy. This assessment is
based on the parameters or criteria specified in the
previous stages. Activities in the stages:
(a) Excavation of Project Information
In the individual project, the analysis will be
carried out information extraction related to the
proposed project that will be assessed with the
work unit of the project proponent. The use of
In-depth interview techniques to support indi-
vidual project appraisal is based on the process
as it is currently used by the IT Steering Com-
mittee team on the research object to clarify de-
tails of the project. The interview is based on
predetermined criteria.
(b) Project Assessment
After an In-depth Interview, each member of
the IT Steering Committee will conduct an as-
sessment of the proposed project. Evaluation is
done by Simplified Scoring Method technique.
The consideration of using the scoring method
is ease of use and has been similar to as is the
implementation of research object so it will be
easy to apply without special learning. The
scoring scale used also refers to the agreement
applied or determined.
3. Screening
Screening is an important part of the selection
process and priorities because at this stage will be
done second elimination. Activity in the screen-
ing stage:
(a) Determination of the Lower Bound-
ary(threshold) of Each Project At this stage
of screening the decision of the lower limit or
minimum value that must be met by a project
to be passed. The lower limit of each criterion
will be different from that determined by
the management. The determination of this
limitation is not done individually but based on
the agreement of the strategic forum.
(b) Project Elimination The next step after deter-
mining the threshold of each criterion is to
eliminate the project that does not meet the
lower limit using Ad Hoc Approach as profiles
method. The Ad Hoc Method Approach as Pro-
files is a method by including a lower threshold
directly on the device used in the assessment
process that was in the previous stage. In its ap-
plication to the research objects, the tools used
are spreadsheets. Therefore Ad Hoc Approach
as Profiles is applied through the insertion of
the lower bound on the spreadsheet form.
4. Optimal Portfolio Selection
In the Optimal Portfolio Selection stage, there is a
comparison between projects from the assessment
results on the criteria of filtering and criteria. Ac-
tivities in this stage include:
(a) Project Prioritization Assessment (Prioritiza-
tion)
The main objective in this phase is to opti-
mize the IT portfolio by considering the cor-
relation between projects and prioritizing the
project group worker who has the potential to
provide optimal value for the company. Project
prioritization is carried out through the assess-
ment of criteria about the interdependency of
the project, resource struggles, technological
conformity, and time, and the value or value of
any previously considered project. The tech-
nique used in the assessment is the Scoring
Method. The use of the scoring method is due
to its ease of use. Besides the Scoring Method
is used to adjust to the overall assessment pro-
cess used previously because, at the end of the
selection and prioritization process, all assess-
ment forms will be incorporated as tools in con-
ducting sensitivity analysis. The importance of
project prioritization for organizations due to
limited resources, money, and human resources
to fund all projects(Turner, 2009).
(b) Mapping of Priority in Prioritization Matrix
A prioritization matrix is a tool used by a com-
pany to visualize prioritization results. Based
on the results of literature review and empiri-
cal study several types of matrices can be used
in mapping priorities, including the nine boxes
matrix as used by Bank Indonesia and 2x2 ma-
trix as used by Bank Mandiri and Banque de
France. Based on the results of the study re-
lated to the advantages and disadvantages of
each matrix, the 2x2 matrix was proposed. The
2x2 matrix selection refers to the mapping of IT
portfolio dimensions implemented by the For-
tune 500 consumer package-goods company in
Best Practice in IT Portfolio Management[2].
The selection of 2x2 matrix usage is also ap-
plied by Bank Mandiri and Banque de France
because of its simple tendency and can map
ICCETIM 2019 - International Conference on Creative Economics, Tourism Information Management
44
firmly with the division of 4 different criteria.
Referring to the literature review in Best Prac-
tice in IT Management Portfolio priority map-
ping priority will be based on risk (risk) and its
contribution to the business (value to the busi-
ness). Based on these two main factors, the
next project is categorized into four categories:
High Priority (Funding Priority), Medium Pri-
ority (Difficult to Execute), Low Priority (Fund
Selectively) and Do Not Fund. Figure 6 shows
the 2x2 matrix that will be used in the prioriti-
zation process.
Figure 6: Matrix Recommendation
5. Portfolio Adjustment
The final output of the overall stage is to present
the overall view of the selection and prioritization
process, which is complemented by the charac-
teristics of each project. In addition to showing
the overview, Archer (1999) also emphasized the
importance of allowing decision-makers to make
final adjustments before making a final decision
related to the portfolio. Activities in this stage are:
(a) Sensitivity Analysis
Sensitivity Analysis is the stage that must be
in the portfolio adjustment; it is because be-
fore the final decision is taken, decision-makers
need to get a chance to review and change the
results of the previous stages. One of the tools
that can be used in doing sensitivity analysis
is spreadsheets in Excel (J. Malligan., 2011).
Sensitivity analysis can be done by collecting
the entire criteria and results of a project assess-
ment calculation in a Spreadsheet (Ms. Excel)
to provide data records during the process if re-
quired by IT Steering Committee participants
and facilitate the process of what-if analysis if
the IT Steering Committee participants want to
make changes to the composition of the project.
(b) Project Categorization and Portfolio Visualiza-
tion
At this stage also done categorization of
projects based on specific criteria. The main
objective of this categorization is to get an
overview or visibility of the entire project plan
by displaying relevant information related to
the project. Visualization of project categoriza-
tion in the portfolio can be done by using Bub-
ble Graph matrix.
4 RESULT
The formulation of the selection and prioritization
model was carried out by the process of analyzing
the existing framework and verifying the research ob-
ject. The results of making this model can be seen
in Figure 8. This model handles several local issues
related to the selection and prioritization process of
IT projects found in research objects. The following
Figure 7 is a summary of locality issues related to the
selection and prioritization process.
Figure 7: Table of a local issue.
Figure 8: Proposed Model
Based on the description above then obtained the
model of prioritization and project selection as fol-
lows:
1. Strategy Alignment
This stage was proposed from the Pre-Screening
stage from the framework by Archer. This stage
is the stage to ensure the project fits the strategic
focus, guarding the overall process, and eliminat-
ing projects that do not meet the criteria. Input at
this stage is the main strategy of the research ob-
ject, the project proposal document, and the list of
selection criteria and prioritization. At this stage,
project mapping and project elimination that are
inconsistent with strategies and criteria are per-
formed using scoring methods. So it can gener-
ate a list of proposed projects that are by the busi-
Propose Model of IT Project Selection and Prioritization: Study Case - Bank Indonesia
45
ness strategy and IT and list the agreed criteria and
techniques to use.
2. Assessment
This stage was proposed from the Individual
Project Analysis stage from the framework by
Archer. This stage is the stage of calculating the
assessment criteria determined for each project.
Input at this stage is a list of proposed projects that
have been through strategy mapping and List cri-
teria used in the assessment. This stage is used to
explore project information and project appraisal
by conducting an in-depth interview and scoring
method to produce a list of interview results and
assessment results from each project.
3. Filtration
This stage is a project elimination stage that does
not meet the specified value. The input of this
stage is the result of individual assessment. The
process undertaken is the determination of the
lower bound, the collection of project appraisal
results and project elimination using ad hoc ap-
proach as profiles and scoring method to generate
a list of projects that have been through the project
assessment and filtering process.
4. Prioritization
This stage is the stage of consideration of the cor-
relation between projects in an integrated way to
optimize the portfolio. Input at this stage is a
list of proposed projects that have been through
assessment and filtering and a list of prioritiza-
tion criteria. The process undertaken in this step
projects prioritization and project mapping in the
prioritization matrix using the scoring method and
2x2 matrix to generate the priority ranking of the
project based on the assessment of the prioritiza-
tion process and the project priority results in the
prioritization matrix.
5. Visualization
This stage is the stage of allowing the decision-
maker to make changes and display the overview
of the portfolio. The inputs at this stage are the
entire assessment form, the project appraisal re-
sult, and the project priority outcome. The process
is sensitivity analysis and portfolio visualization
with spreadsheet set of scoring method form and
bubble graph matrix to produce a list of projects
to be implemented and portfolio visualization ma-
trices.
The model is validated against research objects.
This validation aims to determine the suitability of the
framework with the conditions in the research object.
The validation results are the final model of selection
and prioritization of the IT project. The final model
can be seen in Figure 9.
Figure 9: Table of the final model of selection and prioriti-
zation IT projects.
ICCETIM 2019 - International Conference on Creative Economics, Tourism Information Management
46
5 CONCLUSIONS
Based on the study, several frameworks can support
the process of selection and prioritization, but none of
which is declared as best practice so that the necessary
process of adjustment to the organization. This model
uses An Integrated Framework for Project Selection
as a reference framework for the next developed into
a conceptual model.
Based on the result of the exploration of the se-
lected framework, there are some deficiencies in the
framework, such as the names in the stages that are
considered less representative and the need for de-
tailed activities in each stage, conceptual model pro-
poses with the following details: 1) Strategy Align-
ment,2) Assessment, 3) Filtration, 4) Prioritization,
and 5) Visualization. Each stage consists of certain
activities that refer to the results of the empirical study
and literature review.
This model is created by adopting wisdom and
successfully implemented in the research object. The
success of the model implementation is proven by ver-
ifying the research object. Aspects of local wisdom
in this model include: (1) Different IT development
focuses each year so that a strategic alignment assess-
ment process is needed, (2) Commonly inclined strat-
egy directives, (3) Unoptimal matrices, and (4) De-
termination of reverse priority sequences. Referring
to the importance of culture, process, experience, and
governance in supporting the optimization of the port-
folio selection process, it is necessary to extract
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