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AHP is a method to simplify decision making. If you have many options and many needs, selecting the correct option can be very difficult. If you break it down into a series of small decisions, it is often much simpler. AHP is generally considered to be statistically accurate. Its primary value is, however, to create an ordered list of options based on a complex set of criteria. So if you have 20 projects to complete and you want to know which ones to do first, you can use AHP. If you have a dozen vendors and you want to know which ones to interview, you can use AHP. For anything with complex criteria and many options, use AHP.
You need a spreadsheet or a software tool to do the calculations for you. This is not hard, there are several available or we can supply one for you. You need a series of workshops to determine the priority of the criteria, usually called Business Drivers, and the impact of the choices you have against the criteria. This is not easy, as bringing people to consensus is complicated even if you have a simple model to work through. Finally, you need a ratifying authority to listen to your reasoning and approve the final selection.
This story is from a real project, and uses actual project notes. The client’s goal was to implement a new Digital Banking platform that would meet the needs of all the internal and external stakeholders. The problem was the number of choices and the complexity of the business drivers they had to deal with. The solution was to model the problem using AHP to determine a ranked list of vendors, based on both business goals and technology fit.
The client’s Product Executives and Program Managers met to determine their Business Drivers. These are the non-negotiable, specific, measurable outcomes that the solution has to deliver. The outcome of this session follows.
Product Fit: Payments The solution must provide extended payments functionality that can be leveraged in a digital channel.
Product Fit: Mobile
The solution must provide mobile apps and web from one code base, plus access to camera and NFC capabilities from the mobile device.
Product Fit: Analytics
The solution must accept input from, and provide information to, the corporate data warehouse solution.
Product Fit: Social The solution must provide social media capabilities that can be leveraged.
Vendor Experience
The vendor must understand our core market, and be able to prove they have experience.
Vendor Implementation
Capability
The vendor must be able to deliver to our timescales, with the products versions they demonstrate.
Vendor Thought Leadership
The vendor must be a good partner by adding to what we have already considered.
Technology Platform
The technology meet appropriate Information Technology standards and acceptance criteria.
Cost of Ownership
The project has to show that the investment is worthwhile in the medium and long terms.
Time to Market The solution must allow us to re-home or develop new apps fast enough to meet our product roadmap goals.
Change management - pre-implementation
The solution must make it easy for a customer to move off their current apps and onto this system.
Change management - post-implementation
The solution must make it easy to migrate all the new apps to a single, standards-based model over time.
Working with the leadership team, in our case in a group, we determined relative priority by comparing each Business Driver against each other. We asked the question: “Is Driver A more or less important than Driver B?”
A 5 point scale is meaningful and easy to understand, but you can use whatever scale you need.
Payments Mobile Analytics Social ExperienceImplemen-
tationThought Technology Cost Time
Migration -
Pre
Migration -
Post
Payments 1Less
Important
Less
Important
Much Less
Important
Less
ImportantEqual
Much Less
ImportantEqual
Less
Important
Less
Important
Less
Important
Less
Important
MobileMore
Important1
Less
Important
Less
ImportantEqual
Less
Important
Much Less
ImportantEqual
Less
ImportantEqual Equal Equal
AnalyticsMore
Important
More
Important1
Less
ImportantEqual Equal
Less
ImportantEqual
Less
Important
More
ImportantEqual Equal
SocialMuch More
Important
More
Important
More
Important1
More
ImportantEqual Equal
More
Important
More
Important
More
Important
More
Important
More
Important
ExperienceMore
ImportantEqual Equal
Less
Important1
More
Important
Less
Important
More
Important
More
Important
More
ImportantEqual
Less
Important
Implementation EqualMore
ImportantEqual Equal
Less
Important1
Much Less
ImportantEqual
Less
ImportantEqual
Less
Important
Much Less
Important
ThoughtMuch More
Important
Much More
Important
More
ImportantEqual
More
Important
Much More
Important1
Much More
Important
More
Important
Much More
Important
More
Important
More
Important
Technology Equal Equal EqualLess
Important
Less
ImportantEqual
Much Less
Important1 Equal Equal
More
Important
More
Important
CostMore
Important
More
Important
More
Important
Less
Important
Less
Important
More
Important
Less
ImportantEqual 1
More
Important
Less
Important
Less
Important
TimeMore
ImportantEqual
Less
Important
Less
Important
Less
ImportantEqual
Much Less
ImportantEqual
Less
Important1 Equal
Less
Important
Migration - PreMore
ImportantEqual Equal
Less
ImportantEqual
More
Important
Less
Important
Less
Important
More
ImportantEqual 1
Much Less
Important
Migration - PostMore
ImportantEqual Equal
Less
Important
More
Important
Much More
Important
Less
Important
Less
Important
More
Important
More
Important
Much More
Important1
Eventually we had a complete map. Completing this map as a group exercise can be time consuming, so it’s often useful to complete the map with a smaller group or even individual interviews and present it for discussion to everyone. Team dynamics will decide that for you.
This time working specifically with the program management team, as they had knowledge of each option in detail, we determined the impact each had solution had against each Business Driver. We asked the question: “Does Option A impact Business Driver B in a meaningful way?” Again, a 5 point scale is meaningful and easy to understand, but you can use whatever scale you need.
Payments Mobile Analytics Social Experience Implemen-tation Thought Technology Cost TimeMigration -
Pre
Migration -
Post
Vendor 1 Minor Impact High Impact Minor Impact High Impact Minor ImpactModerate
ImpactMinor Impact
Moderate
Impact
Virtually No
ImpactHigh Impact High Impact
Moderate
Impact
Vendor 2 High Impact High Impact High Impact Minor Impact Minor ImpactModerate
ImpactMinor Impact
Moderate
Impact
Virtually No
Impact
Moderate
ImpactHigh Impact
Moderate
Impact
Vendor 3 High Impact Minor ImpactModerate
ImpactMinor Impact High Impact Minor Impact
Virtually No
Impact
Virtually No
ImpactMinor Impact
Moderate
Impact
Virtually No
Impact
Virtually No
Impact
Vendor 4Moderate
ImpactHigh Impact Minor Impact Minor Impact Minor Impact
Very
Significant
Impact
High Impact
Very
Significant
Impact
High Impact High Impact High Impact
Very
Significant
Impact
Vendor 5Virtually No
ImpactHigh Impact
Virtually No
Impact
Virtually No
Impact
Very
Significant
Impact
High ImpactModerate
ImpactHigh Impact
Moderate
Impact
Very
Significant
Impact
Moderate
ImpactHigh Impact
Eventually we had an Impact Assessment map for all vendors mapped against each criteria. The most important concept to remember is the AHP process is forcing these conversations to happen around 2 simple to understand and agree concepts: 1) Which are the most important Business Drivers? and 2) Which projects have the most impact?
Score Rank Gap
Vendor 1 17.26 4 35%
Vendor 2 21.08 2 21%
Vendor 3 14.78 5 45%
Vendor 4 26.67 1 0%
Vendor 5 20.21 3 24%
The magic of the spreadsheet or software tool works and you have your answer. In our case, Vendor 4 clearly won the competition. But is it as simple as that?
Do you have enough people with the right skills to complete the implementation project now?
Which option returns the most value for the expended outlay? What value do you expect to be returned?
Which option carries the greatest risk, and can you mitigate that risk now or in the future?
Are there regulatory or compliance reasons why you should pick one option over another?
You will need to review your ordered list based on old-fashioned project and program management principles.
Are you selecting projects for your annual portfolio?
Are you trying to choose from a large field of potential vendors?
Do you have a range of implementation options for a project and don’t know which one to select?
We can help you see the path ahead, cycle quicker and achieve earlier.
Call us on (503) 297 5128 or email us at [email protected]
