Clients know their business strategies best. Therefore, clients are best positioned to set the priorities for an organization.
The worst case is when the organization sets its own priorities. Then, they become the "villain" who tells people that they can't have what they need. And clients lose all control of one of their critical factors of production. Priorities within a client-department portfolio should be set by the client executives themselves.
Committees may be used to allocate staff resources across departments. However, committees are an inappropriate method of setting priorities within departmental budgets. Committees can be likened to a "Central Soviet" attempting to plan an economy, the opposite of a free-market system. Executive committees lack the time and attention to detail that is required to understand the many opportunities available in the company. Evidence confirms that they approve only large and more easily understood projects, i.e. conventional operational projects, setting many of the strategic opportunities aside.
Furthermore, in most companies, executives need not ask their peers' permission to deploy resources that they have been given. Committees are not in keeping with the culture and practices in other areas of investment.
Ideally, committees should allocate discretionary resources based on relative investment opportunities, but without approving specific projects. Thereafter, client executives actively manage their investment portfolios and set priorities among their people's competing requests for systems on an ongoing basis. If committees actually approve projects, they become a bottleneck, the organization will become unresponsive to urgent needs, and clients will feel out of control of their factors of production.
A better way is to use the committee to empower individual business units, but leave day-to-day decisions on priorities to the business unit leaders.
Whether corporate committees or individuals in business units, clients should appoint "pursers" who look after their purchases (priorities). They must actively manage priorities on a regular basis. No work should be done without purser approval of funding. And pursers shouldn't approve projects unless they have evidence that the payoff is worth the investment.
To set priorities effectively, pursers must know the size of their resource pools (the limits to their spending power, i.e., budgets and account balances).If client executives do not know the size of their resource pools, they cannot recognize the limits of the finite resource, and so will not be interested in setting priorities.
The first step in getting clients to manage their investment portfolios is to determine what portion of the staff department's budget will be used for clients' projects (as opposed to infrastructure and internal overhead). Then, the organization can divide the available resources among client departments, giving each a finite claim on the organization's time and money.
