Harrah's: Betting on IT Value

Harrah's has a sophisticated process for tracking the true payback of IT projects.

By Kathleen Melymuka

May 3, 2004 12:00 PM ET

Computerworld - Most companies struggle to measure the real value of IT projects, but Harrah's Entertainment Inc. has a system. Over the past seven years, the IT leaders at Harrah's in Las Vegas have developed a robust financial projection, monitoring, measuring and tracking capability that accurately estimates the costs and benefits of IT projects and tracks the business value they create. The result: The business bets big on IT.

"Investments in IT help sustain our position as the industry leader," says Chief Financial Officer Chuck Atwood. "By setting up projects with specific return criteria expected, then monitoring achievement to those objectives, our IT team has built credibility within the organization."

And outside as well. Mark Jeffery, who teaches executive education at the Kellogg School of Management at Northwestern University in Evanston, Ill., recently completed an exhaustive study of best practices in IT portfolio management. Of the 130 Fortune 1,000 companies he evaluated, Harrah's ranked first. "Everything I teach in executive education, these guys are doing," he says. "They blew me away."

IT and business managers share accountability for Harrah's projects, which are designed to be measured and aligned with the business early and often. Frequent monitoring provides opportunities to raise the bets on promising projects and revamp or fold those that are falling short. Harrah's maintains an eye-in-the-sky view of the performance of the entire project portfolio, and project results are fed back into the decision-making process.

"We're constantly evaluating our investment in information technology," says John Boushy, senior vice president of operations and services. "And we make decisions going forward based on that."

Here's how Harrah's does it.

Heath Daughtrey, vice president of IT services at Harrah's

Portfolio planning. At the corporate level, the Program Management Office (PMO) uses Clarity IT management and governance software from Niku Corp. in Redwood City, Calif., to keep a running inventory of all projects and proposals segmented by business unit, product, life-cycle stage and overall goal, such as revenue growth, cost reduction or the opening of new business channels. "It provides one integrated version of the truth," says Heath Daughtrey, vice president of IT services. The PMO maps the portfolio to Harrah's business strategy, prioritizing projects across the business units and looking for an optimal mix. It also keeps tabs on IT resources (staff, skills, partnerships) and how those affect IT's ability to deliver.
At the business unit level, the PMO helps units prioritize projects and develop annual plans and budgets, looking for opportunities to leverage and advance enterprise architecture and product strategies while delivering

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