“Months late.” “Way over budget.” “Totally irrelevant.”
If those phrases strike you as synonymous with “IT projects,” join the club.
The good news is that the companies are finally getting some religion around this major, and majorly frustrating, capital expense. They be 20 years late and untold billion dollars short, but a growing number of CIOs, consultants, software vendors, and — yes — CFOs are determined to get IT projects completed on time, on budget, and in sync with corporate strategy.
Isn’t that what they should have been doing all along? Yes, but the situation is more complicated than you may think. First, understand that everything your IT organization does, from installing an ERP system to repairing a printer, is thought of as a “project.”
Second, it’s hard to pull back and think about more-sensible approaches to projects when so many of them are going up in flames. More than half of all IT projects are “challenged” and fully 15 percent are “impaired” or failing, according to The Standish Group International Inc.’s 2002 survey of more than 13,500 IT projects.
While these figures are significantly better than they were a decade ago, the feeling of continual crisis lingers. That’s not good news to any CFO watching 15 percent of the company’s total IT spend go down the drain.
Perhaps an even more serious problem — and one that is nearly impossible to measure — involves IT projects misaligned with corporate strategy. Even if these projects “succeed” — that is, are finished to spec, on time, and on budget — they can be fiascoes that consume massive quantities of money, talent, and time unless they truly help the organization.
“At the end of the day, CXOs have only three agenda items: find shareholder value, restore investor confidence, and adapt for uncertainty,” says Cathleen Benko, a Braxton (formerly Deloitte Consulting) global E-business practice leader and co-author of a new book, Connecting the Dots (Harvard Business School Press, 2003) on aligning projects with corporate objectives. Projects that further strategic goals help restore investor confidence.
As Benko’s comments imply, much of the new focus on IT projects is being driven by the tightening of IT budgets, which has upgraded the goals of completing projects on time and on budget from “nice if you can do it” to mandatory.
The good news is, that, done right, IT project management can save a bundle. One corporation studied by Meta Group Inc. senior research analyst Melinda-Carol Ballou eliminated redundant IT projects and saves $13.2 million. Today. Most efforts to improve IT project performance fall under three broad categories: what’s called project-portfolio management, new software tools, and training and professional certification.
Managing the Portfolio
The concept of project-portfolio management is simple: ensure that projects support a business’s strategy; that concurrent projects don’t overlap or, worse, oppose each other; and that resources (people, tools, equipment) are allocated efficiently and effectively.
IT departments manage their portfolios by listing all projects, estimating how many resources those projects will consume, and determining which projects best align with the company’s overall strategy. Companies that properly align IT projects with business strategy can save 10 to 15 percent of their overall IT spend, estimated Primavera Systems Inc., a vendor of project software.