4 Steps to Prevent Project Failure
November 19, 2007
It’s a lament many CIOs hear all too often from business managers: “Why can’t you start on my project right now? Why do I have to wait?” With IT project backlogs at some organizations running six to 18 months-or even longer-there’s good reason.
“Businesses need a way to ensure it’s not the squeakiest wheel but the most strategic project that gets IT’s attention,” says Ian Finley, research director at Boston-based AMR Research. “At the same time, IT needs to work side by side with the business units to set and execute strategy.”
Savvy IT project management is the solution. In a report issued by AMR last week, “How Leading Companies Unite IT with the Business,” Finley and co-authors Bill Swanton and David Brown find that smart IT project management can go a long way toward ensuring the projects IT focuses on are the most strategic for the organization.
“In a study of IT management effectiveness, we identified a class of companies that set themselves apart with deft leadership and effective management of IT projects,” Finley says. “This discipline just started to get applied to IT projects in the last few years.”
What these most successful IT groups have in common is a set of four best practices for managing their IT projects. They are:
A Business-IT Governance Council. This group, usually made up of both business and IT leaders, makes decisions on the business case of future IT investment, reallocates resources as priorities change, and determines which IT investments should be ended.
“The majority of large companies we see have an IT steering committee with IT and businesspeople deciding what the organization’s priorities should be,” Finley explains. “For large organizations with centralized IT operations that have multiple divisions they have to serve, this group is essential for setting corporatewide priorities to balance the needs of all divisions.”
IT Portfolio Management. While IT project management ensures the organization is correctly implementing projects, IT portfolio management aims to ensure that IT does the right projects. First and foremost in the portfolio management process is the tenet that IT project investments are based on business decisions and not IT decisions.
“The portfolio is managed more like a set of stock investments,” Finley explains. For many organizations, this means striking a balance among investments that keep the business running, investments that enhance the business, and investments that are high-risk but hold the promise of transforming the company. “It’s an interesting shift from questioning whether a project has a return on investment or are we making the right steps as a company,” he says.
A Program Management Office. This is a middle-management group that handles the day-to-day IT resource tradeoffs while making exceptions as needed to meet strategic business goals. If the company needs a new warehouse management system for the holidays, for example, the PMO assigns the project priority status. The PMO also keeps a close eye on the impact of IT project interrelationships.
“If you have 15 interlinked projects that are part of a larger program and one is behind, you need to flag it and redeploy people and resources to get it done,” Finley says. The PMO also serves as a center of excellence for project management skills. “It acts as a learning and training organization to help standardize the way to do projects,” he adds.
IT Project and Portfolio Management Software. PPM systems automate the management of IT projects, giving business managers as well as IT managers a portfolio view. “In some companies that have tens or even hundreds of projects, it’s hard to control them all without having these systems in place,” Finley says. Numerous software companies, including ERP vendors SAP and Oracle, have project and portfolio management solutions. Other key PPM vendors include CA, with CA Clarity, and Hewlett Packard, with HP Portfolio Center, both of which have made acquisitions in this market. Among the pure PPM software companies are PowerSteering and Innotas, each of which offers its PPM software as a service, and Planview.
Bottom line, Finley concludes, “IT needs to work side by side as part of the business, both setting and executing strategy. If your company is going to be innovative, you’re going to have to involve IT.”