Identifies the major problems a new investment must address and establishes the criteria it then uses to select the most sensible investments.
Most organisations operate an annual budget cycle where the need for new investment is considered, potential investments are identified, and decisions are made as to how the budget will be spent.
These decisions are sometimes made without the benefit of a clear understanding of the challenges to the organisation or criteria to evaluate competing bids. In the absence of such criteria, investment decisions are often determined by ‘the loudest voices’.
Organisations that have used this practice have found it provides a range of benefits including:
There are five steps involved in this exercise as depicted below. Steps 1, 2 and 3 establish the need, the preferred strategic response and the criteria for selecting the best investments.
Step 4 defines how the strategic response should be put into effect. When candidate investments have been shaped, step 5 uses the criteria developed earlier to prioritise them and make investment decisions.
The physical output of these discussions is a service logic and prioritisation SLIPService logic and investment prioritisation (SLIP)Articulates the problems confronting the organisation/program and the response that will address the problems. Documents how candidate investments have been prioritised based on their ability to respond to the problem and deliver the benefits..
While the IMS practices were originally used for single investments, they are increasingly being used to establish the logic for investment programs.