Maximizing Benefits from IT Project Management

From Requirements to Value Delivery

José López Soriano

• Publisher: CRC Press
• Year: 2016
• ISBN:
  9781466516250
• Edition: 1
• Topic: Business
• Subtopic: Project Management
• Index: Business

With the majority of IT projects being delivered late, over budget, or cancelled altogether, it is clear that traditional project management methodologies do not provide an effective framework for today's IT projects. It is evident that a new Return-on-Investment (ROI) oriented approach is required that focuses on the ROI of a project fro

Chapter 1

Reflections on the Current State of IT Project Management

There have been a number of changes in our society in recent years, and it is appropriate to mention a few because they could become determining factors in changing our business landscape, thereby affecting information technology and important information systems operations. We must be aware of changes such as progressive globalization; the consequent elimination of barriers for commerce and international movements of people, capital and products; the increased competition between companies from different world regions; and an accelerated technological innovation that is pushing up productivity and competition in all industries and economic sectors. These are factors that contribute to an environment of growing business complexity and extraordinary difficulties in the management of today’s enterprises.

Investing in Information Technology

The emergence of a small number of companies as prominent, but unsuspected leaders in their respective markets, as well as the disclosure and dissemination of some of their practices that were key to achieving this success, have prompted admiration in other companies that have recognized the clarity of their vision and strategy. In the process of building new business empires, it appears that the key factors of successful emerging companies include a firm commitment to information systems.

Accordingly, investments in today’s businesses are focused on the design, development, implementation, and maintenance of information systems, in an attempt to replicate and emulate the success of leading companies. These investments are growing every year and are reaching astronomical figures, without showing any indication of a definite limit.

The consulting firms, technology companies, and providers of services that are needed for the ongoing spread of information technology are becoming larger, year on year, and many have become international in scale. In some cases, their investments have resulted in the creation of global companies with economic results that are the envy of many organizations from all economic sectors around the world. However, in too many cases, this increase in revenue and benefits is not always matched by a similar trend in technical credibility, corporate reputation, and professional recognition. On the contrary, the confidence and respect that have been held by these companies in the past are deteriorating rapidly and continuously as a result of their failed and poor performances on various projects.

It is clear, therefore, that investment in information technology should include investment in an improvement in project performance in implementing information technology solutions.

Examining IT Project Performance

There are a variety of reasons for this deterioration in the public image of such companies, as well as in the technology sector as a whole. One reason lies in corporate mergers carried out from a myopic perspective, without any consideration about clients or employees. Another reason may be found in far-reaching mistakes in marketing strategies or policies that have sent confusing and contradictory messages to the market. However, above any other consideration we can highlight, there is one prominent, basic reason that should be considered—the fact that there are a significant number of projects that, despite the money, time, and resources spent on them, have failed to reach a successful conclusion.

It is important that we make clear from the beginning that any project could face difficulties that threaten the goal it is attempting to achieve. In fact, most professionals agree that all projects will experience some level of difficulty that could interfere with the project’s progress or outcome. For example, sooner or later, projects will need some particular resource that is unavailable, encounter unexpected budget restrictions or increasing project costs, or have the project scope slide away from what was originally intended. However, the simple fact that projects will face such difficulties is not the primary concern. What does matter is how project managers and their teams react to project difficulties—how they respond to each situation that threatens the progress and successful outcome of their project.

The difference between those companies that are successful in project management and those that are not can be seen in how they have positioned their project teams to react to specific project difficulties or to a project that has generally become a problem. These circumstances provide the chance for corporate values, principles, and culture to play a decisive role in the resolution of project difficulties. It is an opportunity for the organization to show that the “beautiful words” they use, such as commitment, team, respect, and support, are principles that are fully embedded in the corporate culture, and not just words used in marketing speeches and advertising campaigns.

The number of projects terminated before reaching their goals, either because of cancellation, abandonment, or otherwise by executive decision, is an increasingly important consideration, as is the amount of money invested in them. However, the prematurely closed or incomplete project is just the visible tip of a huge iceberg that lurks beneath the surface (Figure 1.1). These “unsuccessful” projects are the visible portions of a much larger problem that lies beyond a superficial glance. The larger problem is that unsuccessful projects are undermining the credibility of a key sector of the current economy and are affecting the development of our businesses, institutions, and even society in general.

There are also an increasing number of so-called “successful” projects that are being delivered with changes that modify or even nullify intended project outcomes in terms of deadlines, budget, and scope when compared with the original planning. The effects of such changes might be considered acceptable, but in certain markets they are simply overwhelming.

Figure 1.1 The iceberg of project results.

Some estimates from independent organizations dedicated to the education and certification of professionals in project management indicate a very low project success rate. For example, the APM Group reflects on this in their introduction to their course for PRINCE2 certification. They present figures that suggest that as many as 90% of projects can be labeled as unsuccessful. That means that only 10% of projects are finishing successfully.

Dealing with IT Project Performance Outcomes

Suppliers and customers have a common interest in finding a formula that will achieve some semblance of project success. They need to find solutions for achieving specified project goals and objectives as prominent indicators of project success. They also need to develop the means to conclude each project with some dignity as a way to save organizational credibility and maintain personal professionalism within their respective organizations.

Projects that are deemed unsuccessful can usually be analyzed to identify the underlying causes. Circumstances such as underutilizing established standard procedures, dismissing the process for managing scope expansion, or avoiding necessary restatements of the project’s objectives are often found to be contributing factors. At the same time, however, we often see attempts made to save the reputations of the executives and project managers responsible to the client organization. This situation can sometimes seriously damage the organization’s capability in project management. When managers take actions to avoid the embarrassment of recognizing the relative failure of any project under their control, they essentially deny the analysis and evaluation of what happened to cause project failure. In turn, they are unable to make a diagnosis and recommendation to prevent the repetition of the cited problems on future occasions.

When this happens, the conditions that contributed to project failure remain concealed and hidden from the eyes of management and key decision makers, and continue to spread adversity on subsequent projects and throughout the project management environment. Unfortunately, the frequency with which these conditions occur is prone to increasing, making some customers and suppliers consider this condition to be simply inevitable when starting an information systems project.

There is also another type of project failure to consider. This relates to projects that, although completed within established deadlines, within the established budget and within the established functional scope, do not meet the expectations placed on them by the client organization. When client expectations are not satisfied, the client often sees its investment as one that does not provide the intended benefits. The client therefore perceives the project to be a failure accompanied by a significant dose of deception and frustration as a natural consequence.

This type of project failure appears to represent a large majority of the “failed” projects that can be observed in many companies and organizations and across industries. Some career IT professionals will naturally oppose the client’s perception of project failure (based on client expectations) and attempt to provide explanations to sway the client’s viewpoint.

However, if we listen to explanations from those professionals, we can appreciate that such statements are usually based on the consideration of two simple parameters: time and budget. These two parameters are project dimensions that are defined and measured for virtually all projects, and they do contribute to evaluating the success or failure of a technology project. However, this puts aside other considerations such as added value and benefits that the client expects to receive with the completion of the project. For the client, these considerations are the very reason that the necessary investment has been made. IT professionals need to consider these factors in the ongoing process of project management.

Selecting IT Projects

All entities, public or private, select their IT projects for a particular reason, and do so with the hope that the introduction of new information systems will enable their organization to implement a desired change, such as transforming its structures, working procedures, and ways of doing business other than those currently in play. With this change, the organization seeks to respond to the challenges that are expected to arise in the future.

Although the project selection process may sound ethereal and vague, we can be sure that it is not. In essence, the reasons why an organization begins a project can be reduced to two basic and elementary reasons. The first is to provide opportunities for increased revenue associated with IT system implementation. This includes

• Improving financial returns on IT investments in the organization
• Placing products in new markets
• Improving customer assessment of their products
• Increasing the number of clients
• Selling more, selling at a better price, or just achieving better sales recognition
• Achieving a better image by current and potential customers

The second reason is to provide opportunities for reducing costs associated with IT system implementation. This includes

• Identifying and evaluating overall project costs to ascertain where cost reductions can be made in the investment without being detrimental to the project (including costs associated with project materials)
• Reviewing time and schedule constraints to ensure adequate and appropriate durations have been associated with each specified project activity and task
• Examining resource needs against project performance requirements to ensure properly qualified personnel are devoted to the operation (and to avoid the use of overqualified or underqualified team members that affect estimated costs)
• Managing the allocated amount and timing for the dispersal of funds that will be committed to the project effort as a means of managing cash flow

Unfortunately, in too many cases, the project team does not consider these factors when reviewing projects goals and objectives and when preparing project plans. This may be due to the use of methodologies and project management tools that were conceived and designed using a very different paradigm than experienced by the current business environment.

Reviewing the Evolution of Project Management Practices

Many early project management processes and tools were created by organizations serving the defense industry, which produced new computing systems as required, unique military vehicles and equipment, and strategic and tactical weapon systems. These products were needed, for example, as a means to stay ahead in the arms race between Western and Soviet blocs during most of the second half of the twentieth century. In those times, project deadlines were particularly critical, as projects represented vital competition. It was important to arrive first at every project milestone as a means to maintain the capability to contain threats to the territorial domain, provide strategic superiority, and, ultimately, assure world peace. To a large extent, the need to produce relevant defense systems and equipment in a timely manner was more important than the cost incurred.

Subsequently, the use of these tools and techniques evolved and entered the world of private enterprise. In this new project management environment, business rules differed significantly from those in the public sector, with the motivation changed to consider overall project performance and its impact on business (and no longer just the vital order of milestone accomplishment); companies, finding themselves subject to economic vicissitudes, developed a growing concern about the cost and more believable objectification of project management success.

In contrast, concern for customer benefits has been addressed only recently, probably linked to a number of reasons connected with the history of project management. In the early years, when project managemen...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Table of Contents
• Acknowledgment
• Preface
• 1 Reflections on the Current State of IT Project Management
• 2 The Evolution and Influence of Knowledge Management
• 3 Perspectives on the History of Computing
• 4 The Systems Development Life Cycle—Introduction
• 5 The Systems Development Life Cycle—Planning
• 6 The Systems Development Life Cycle—Analysis
• 7 The Systems Development Life Cycle—Design
• 8 The Systems Development Life Cycle—Build and Test
• 9 The Systems Development Life Cycle—System Implementation
• 10 Managing Problems Related to Information Systems
• 11 Managing Problems Related to Project Management
• 12 Managing Problems Related to the Project Budget
• 13 Managing Problems Related to Value Delivery
• 14 Managing Problems Related to Internal Supplier Issues
• 15 Creating a Methods Approach to Work
• 16 The Role of Information Systems in Generating Business Value
• 17 Value Chain and Process Management
• 18 Opportunities to Create Value through Information Systems
• 19 Managing the Return on Investment
• 20 Project Analysis and the Business Case
• 21 Project Classifications in the Business Environment
• 22 Preparing the Project Definition
• 23 Structural Benefits
• 24 Operational Benefits
• 25 Business Enhancement Benefits
• 26 Improved Management Benefits
• Index