Project Prioritization as a Key Element in IT Strategic Demand Management Igor Aguilar Alonso School of Computer Science, Technical University of Madrid, Madrid, Spain iaguilar@zipi.fi.upm.es José Carrillo Verdún School of Computer Science, Technical University of Madrid, Madrid, Spain jcarrillo@fi.upm.es Edmundo Tovar Caro School of Computer Science, Technical University of Madrid, Madrid, Spain etovar@fi.upm.es Abstract. This paper describes demand management and its life cycle, taking into account the IT priorities model and project prioritization as a key demand management element. One of a company’s main objectives is to get the maximum benefit from its businesses in the shortest possible time. To do this, it is necessary to properly manage customer demand and satisfy customer needs. Therefore, it has to properly prioritize projects in accordance with criteria established by the company or through the IT portfolio management office, giving priority to projects that will most benefit the company if run. To achieve these goals, liaison between senior business executives and the chief information officer responsible for managing IT should be good. I. INTRODUCTION The information technology (IT) strategy varies from one organization to another and must be applied to all IT departments. IT departments are managed by the chief information officer (CIO). The best CIOs use a set of sophisticated techniques to develop strategies to ensure that the basic IT operations work well at the lowest possible cost, giving added value to the enterprise. Released from basic operating problems, they are free to focus on maintaining effective working relationships and create thorough business knowledge, recruit the best talent for their teams, and maintain a clear vision of the industry and the evolution of technology to create added value for the enterprise. This ensures that the CIO is able to identify, promote and implement significant business change initiatives. The CIOs, the chief executive officer (CEO) and the board of directors are responsible for conducting strategic planning for the enterprise. The project prioritization is one of the key business stages, and is directly related to the stages of the demand process life cycle. The CIO will work actively with other senior executive members to develop the enterprise’s project prioritization, thus ensuring that demand management is efficient. According to the demand classification [1] —(1) strategic demand, (2) tactical demand and (3) operational demand—, strategic demand is the most complex to manage. This is why the CIO and the board of directors should have thorough business knowledge to implement and carry out very detailed planning. This paper presents project prioritization as a key element in IT demand management. Section (1) is an introduction setting out the importance of IT strategic demand management for achieving strategic business planning objectives. Section (2) defines strategic demand and the demand process life cycle. Section (3) presents the IT priorities model and alignment of IT with business objectives. Section (4) presents the key components for project prioritization and assessment. Section (5) presents the project prioritization, followed by the conclusions. II. STRATEGIC DEMAND Strategic demand is managed through the project portfolio. This portfolio manages ideas spawning new businesses or project innovation. Strategic demand "represents the most significant opportunity to increase business value”. [2]. Project portfolio management (PPM) is an event-based process that can evaluate, prioritize and monitor projects. Pressure to maximize profit can come from internal factors, i.e. business partners, board of directors or other business units, or from external factors, such as regulatory frameworks, market competition, etc. For this reason, there needs to be a very close link between strategic planning and project processes from the very start. Strategic demand management depends on (1) strategic planning units, (2) strategic process planning, (3) resource location, (4) budget location, (5) project selection and implementation and (6) project "post-mortem" metrics to improve good practice in the organization. By implementing these best practices, we can manage demand at a management process level, such as:  Clearly identify strategic objectives: strategy development is highly collaborative, involving both IT and business executives [3]  Use an event-based decision-making process: projects are evaluated, selected, prioritized, funded and reviewed based on their potential risk-adjusted value in the context of the organization’s strategic objectives [4]