Management of ITEnabled Business Projects

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Management of IT-EnabledBusiness Projects
Dr. Mary C. Lacity
Man, Universe, the Controller Diego Rivera
(1886-1957)
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Management of IT-Enabled Business Projects

• The objectives of this module
• Gain an understanding of the track record and
  challenges of managing large scale, IT-enabled
  projects
• Understand the relationship between
• project management managing the project phases
• change management managing the people affected
  by change,
• mostly through training
  incentives
• Explain robust, best practices for doing the
  thing right. These are management practices
  that have been associated with success since the
  beginning of ITthe practices do not change just
  because technologies change.
• Gain an appreciation for the difference between
  doing the thing right and Doing the right
  thing.

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Session Objectives

• Business solutions drive technology selection
• Secure top management active support
• Select high powered project manager with proven
• track record
• Involve incent knowledgeable users
• Don't judge success solely based on time to
  budget
• Buy-in outside expertise to transfer learning
• Implement incrementally
• Manage scope creep, perhaps using
• 80/20 satisficing rule
• Beware of Mythical Man Month

Ensure Value for IT Spend
to
Doing The Thing RightRobust Best Practices for
Project Management
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Relationship Between Project Management Change
Management
PROJECT MANAGEMENT PHASES
Planning
Testing
Development
Design
Requirements Analysis
Implementation
CHANGE PHASES
Pre-awareness
Awareness
Self-concern
Mental Tryout
Hands-on
Acceptance
Change Strategy Audience Analysis
Impact Assessment
Sponsorship Communication Plan

Role Design Mapping
Training
Design

Training Deployment

Readiness
Assessment

Startup
Support
Source Adapted from Roberts, Jarvenpaa Baxley,
MISQE, 2003
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Change Management

• The 1 contributor to project success is strong,
  visible and effective sponsorship.
• The top obstacle to successful change is
  employee resistance at all levels front-line,
  middle managers, and senior managers.
• Employees want to hear messages about change
  from two people the CEO or their immediate
  supervisor (and these messages are not the same).
  
• When asked what they would do differently next
  time, most teams would begin their change
  management activities earlier in their next
  project, instead of viewing it as an add-on or
  afterthought.
• The top reasons for employee resistance are a
  lack of awareness about the change, comfort with
  the ways things are and fear of the unknown.
• Middle managers resist change because of fear of
  losing control and overload of current tasks and
  responsibilities.

Source Report sponsored by ProSci based on 284
participants in 50 countries
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Project Management Studies
For the past 30 years, up to 80 of all IT
projects are late, over-budget, and/or fail to
deliver promised functionality. See Keil, Mark
and Montealegre, Ramiro, Cutting Your
Losses,Extricating Your Organization When a Big
Project Goes Awry,Sloan Management Review,
Spring , 2000, pp. 55-68. See Sauer, Chris,
Why Information Systems Fail, Alfred
Waller,1993. See The Standish Group CHAOS
Report reported on http//www.standishgro
up.com/chaos.html See Peter Morris, Project
Management Lessons from IT and Non-IT
Projects, in Information Management The
Organizational Dimension, Earl (ed),
Oxford University Press, 1996, pp. 321-336.
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California Department of Social Services
State-wide Automated Child Support
System Expectations 76 million contract with
Lockheed Martin to develop the system 3 year
schedule to complete Outcome Cancelled in
November 1997, after spending 435 million
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Denver International Airport
Baggage Handling System Expectations 175.6
million contract with BAE Automated Systems to
develop the system 18 month schedule to
complete, April 22 1992 to Oct 1993 Outcome
Cancelled after horrible test in April 1994,
after spending over 2 billion
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London Stock Exchange
Integrated Claims and Settlement
System Expectations 50 million cost estimate
to develop the system (Coopers as project
management) 2 year project to complete, Dec 1989
to Oct 1991 Progress In-house staff will take
too long, buy Vista software hire
Vista to modify (est. cost to modify, 1
million) Outcome Cancelled on March 1993,
after spending 400 million
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Standish Group CHAOS Report
In the US, companies spend 250 billion each year
on development of 175,000 IT projects. Research
Method Interviewed 365 IT executives about
8,380 IT projects. Large company gt 500
million in revenue Medium company 200 to 500
million in revenue Small company 100 to
200 million in revenue
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Standish Group CHAOS ReportIT Projects
classification
Type I Success on time, on budget, promised
functionality Type II Challenged over-budget,
over-time and or missing
functionality Type IIIFailed Severely
impaired projects cancelled projects
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Standish Group CHAOS ReportIT Projects
classification
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Standish Group CHAOS ReportIT Projects
classification
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Standish Group CHAOS ReportFailure Statistics
For every 100 project starts, there are 94
restarts For Type II and Type III Projects
delivered at 189 of original cost estimate
Large companies 178 Medium
companies 183 Small companies
214
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Standish Group CHAOS ReportFailure Statistics
For Type II and Type III Projects delivered at
222 of original time estimate
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Standish Group CHAOS ReportFailure Statistics
For Type II Projects Only 61 of content
delivered
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Standish Group CHAOS ReportFailure Rates over
Time
48 of participants believe there are more
failures today than 5 years ago. 46
of participants believe that there are more
failures today than 10 years ago
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How do IT Project Success RatesCompare with
other large projects?
Peter Morris studied 1,444 projects world-wide in
many industries. Only 2 of projects were
delivered on budget Example Trans Alaskan
Pipeline estimated cost in 1969
960 million actual cost
8.7 billion He found that cost
escalation was largely due to factors outside of
project managers control, such as government
action, inflation, strikes, technical
uncertainty, scope changes, weather.
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Morris StudyFactors Affecting Project Success
ENVIRONMENTAL FACTORS Politics,
Community, Environment, Weather
EXPECTATIONS/ ATTITUDES
PROJECT DEFINITION Requirements known Technology
Proven
PROJECT OUTCOME
FINANCING ECONOMICS poor c/b analysis budget
cuts
IMPLEMENTATION best practices such as top
management support, user involvement, adequate
resources, effective teams, quality assurance
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Industry Comparison of External Factors
INDUSTRY EXTERNAL
FACTORS AEROSPACE/DEFENSE Stable
requirements POWER
Long development (3 years) long life
(30yrs) PETROCHEMICAL, As above but
less protected by environmental MINING,
factors SHIPPING CIVIL
BUILDING Criticized for poor
management, but removed
from users products last
years IT PROJECTS Intimate
user involvement multiple stake-
holders
unstable requirements, changing
specs soon as
implemented
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Standish Group CHAOS ReportSuccess Statistics
on Type I

• User Involvement
• Executive Management Support
• Clear Statement of Requirements
• Proper Planning
• Realistic Expectations
• Smaller Project Milestones
• Competent Staff
• Ownership

DOING THE THING RIGHT
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Doing the right thing.
Business drives, IT enables..
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Project ManagementThree case studies
Manufacturing Centralized order scheduling
system to
reduce cycle time Centralized
Decision-making Baking Hardware
migration to cut costs No changes in
decision-making Insurance Claims
processing system to reduce fraud
Decentralized decision making
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Project ManagementThree case studies
Manufacturing Expected Costs of 6 million, 2
years Actual 12 million, more than 4
years Baking Expected Costs of 7
million, 2 years Actual 1.5 million for
pilot, project cancelled Insurance
Expected Costs of 4.5 million Actual 6
million, almost a year late
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Project ManagementThree case studies
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QUESTIONS TO THINK ABOUT

• Should success be based on time on budget to
  functionality?
• Baking is a Type III project that met all
  objectives
• Insurance is a Type II, mediocre results
• Manufacturing is a Type II, excellent results
• Which projects Did the thing right?
• Which projects Did the right thing?

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Old Claims Process at InsurancePay out
222,000,000 year
Honey, what else can we add to this claim???
Throw in everything!
Headquarters Mainframe
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Old Claims Process at Insurance
Headquarters Mainframe
Claims typed in
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Old Claims Process at Insurance
Supervisor reads mainframe reports and assigns to
a claims handler
Headquarters Mainframe
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Old Claims Process at Insurance
Claims handler investigates the claim and
decides on award
Headquarters Mainframe
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Old Claims Process at Insurance
Looks good, cut them a check
Headquarters Mainframe
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Old Claims Process at Insurance
Customer has time to exaggerate or make up claims
Supervisor doesnt assign cases based on expertise
Headquarters Mainframe
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New Claims Process at Insurance
Customer must phone in claim
Headquarters Mainframe
Claim handler prints and sends to customer
for signature and also saves electronic copy of
claim
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New Claims Process at Insurance
Signed customer document scanned and stored on
image server
Headquarters Mainframe
Mainframe program assigns complexity and
expertise rating from 0 to 20
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New Claims Process at Insurance
Headquarters Mainframe
Each claims handler has an expert rating to
determine what claims they can work on
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Manufacturing

• Poor customer service, poor manufacturing
  coordination due to a lack of shared information
  about each of the plants capabilities,
  capacities, and schedules.
• BPR Centralize decision-making, software
  selection drove client/server
• Implemented a global client/server application
  for customer-ordering, manufacturing planning,
  plant scheduling, and product specification.
• Improved customer service from 3 weeks to 4
  hours, decrease manufacturing cycle from 27 to 19
  days.
• Huge success, although senior management credit
  manufacturing with the improvements

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Manufacturing
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Manufacturing
Can I order 60,000 wafers with these
200 parameters?
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Manufacturing
Let me check, Ill get back to you
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Manufacturing
Can you do 60,000 wafers?
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Manufacturing
Well, let me see if I can get some crystal...
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Manufacturing
Hey Joe--can I have bunch of crystal by next
week?
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Manufacturing
I can give you half what you needtry Ben
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Manufacturing
Ben--do you have x amount of crystal to ship by
next week?
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Manufacturing
No, but I can make some within 3 weeks. Want it?
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Manufacturing
Let me get back to you
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Manufacturing
Susan, can I have x amount of crystal?
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Manufacturing
Sure I can ship today!
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Manufacturing
I can make 30,000 wafers in 3 months, but the
rest will take 5 months.
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Manufacturing
Let me try some other plants first...
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Manufacturing
THREE WEEKS LATER.
Great news we can do it!
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Manufacturing
Thanks but I went with your
competitor--he gave me a quote the
next day.
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Manufacturing
This is what you are going to make and when!
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Manufacturing
Sir I am happy to confirm your order within 4
hours!
Yipee!!!
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Baking

• 8 million per year on mainframe outsourcing
  contract perceived as too expensive.
• Migration of mainframe transaction processing
  systems to client/server for 35 bakeries to
  client/server to reduce costs.
• No changes in organizational structure or
  processes.
• Pilot project a technical success
• Project canceled when company was sold
• New management believes in letting each bakery
  select its own technology

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Baking
Headquarter Mainframe
Daily sales, returns, orders
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Baking
Headquarter Mainframe
Daily baking schedules, driver instructions, price
s, discounts, etc.
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Baking
Headquarter Mainframe
Daily baking schedules, driver instructions, price
s, discounts, etc.
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Original Plan at Baking
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Denver Pilot at Baking
Big success!
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Revised Plan at Baking
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PROJECT OUTCOMES
But are they successes or failures?
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PROJECT JUSTIFICATIONPRACTICES
Not just cost/benefit analysis Contribution to
business develop new distribution
channels strategy
mass customization

Process
improvement quicker manufacturing time
faster
product development improved customer
service
reduced inventory levels Opportunity costs
what happens if we dont do this
project?
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REASONS FOR COST/TIME OVERRUNS
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PROJECT JUSTIFICATION
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Lesson Companies needed to secure top management
support in the project, primarily by having a
senior-level project sponsor.
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Lesson Companies needed to secure top management
support in the project, primarily by having a
senior-level project sponsor.

• Project Champion Champions are managers who
  actively and vigorously promote their personal
  vision for using IT, pushing the project over or
  around approval and implementation hurdles.
  They often risk their reputations in order to
  ensure the innovations success (Beath, 1991, p.
  355)
• Project Sponsor Sponsors have the funds and
  authority to accomplish their goals (Beath,
  1991, p. 355) (A less active and less
  enthusiastic role compared to a champion)

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Lesson Business strategy drove technology
selection in 2 companies
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Lesson All companies hired some outside
experts, to varying success
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Lesson All companies hired some outside experts,
to varying success

• Lesson From prior research on 116 sourcing case
  studies, the development of immature technologies
  were the worst to outsource because
  specifications were uncertain and no transfer of
  knowledge occurred.
• The best sourcing model for immature
  technologies buy-in vendor resources

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Lesson Each company implemented incrementally
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QUESTIONS TO THINK ABOUT

• Should success be based on time on budget to
  functionality?
• Baking is a Type III project that met all
  objectives
• Insurance is a Type II, mediocre results
• Manufacturing is a Type II, excellent results
• Which projects Did the thing right?
• Which projects Did the right thing?

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Mastering the Next Wave of Enterprise
SystemsLeveraging Lessons From ERP
By Carol Brown and Iris Vessey, MISQE, 2003.
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Three Successful ERP Implementations
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Noted Practices
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Session Objectives

• Business solutions drive technology selection
• Secure top management active support
• Select high powered project manager with proven
• track record
• Involve incent knowledgeable users
• Don't judge success solely based on time to
  budget
• Buy-in outside expertise to transfer learning
• Implement incrementally
• Manage scope creep, perhaps using
• 80/20 satisficing rule
• Beware of Mythical Man Month

Ensure Value for IT Spend
to
Doing The Thing RightRobust Best Practices for
Project Management