prioritizing and selecting it projects - lecture notes

8/3/2019 Prioritizing and Selecting IT Projects - Lecture Notes

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PRIORITIZING AND SELECTING ITPROJECTS


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Most Enterprise Software

Implementations Fail: ERP, CRM, SCM,

BI http://www.cio.com/article/486284/10_Famous_ERP_Disasters_Dustups_and_Disappointm

ents

http://www.crmblogguy.com/crmfailure.htm

~60% of all ERP

implementations fail

~47% of CRM

implementations fail

(Forrester Research)
http://www.cio.com/article/486284/10_Famous_ERP_Disasters_Dustups_and_Disappointmentshttp://www.cio.com/article/486284/10_Famous_ERP_Disasters_Dustups_and_Disappointmentshttp://www.cio.com/article/486284/10_Famous_ERP_Disasters_Dustups_and_Disappointmentshttp://www.crmblogguy.com/crmfailure.htmhttp://www.crmblogguy.com/crmfailure.htmhttp://www.cio.com/article/486284/10_Famous_ERP_Disasters_Dustups_and_Disappointmentshttp://www.cio.com/article/486284/10_Famous_ERP_Disasters_Dustups_and_Disappointmentshttp://www.cio.com/article/486284/10_Famous_ERP_Disasters_Dustups_and_Disappointmentshttp://www.cio.com/article/486284/10_Famous_ERP_Disasters_Dustups_and_Disappointments


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Most IT Projects (will) fail

1. Failure to assess risk (or acknowledge) theimplementation risk of a project at the time it isfunded

2. Failure to consider the aggregateimplementation risk of a portfolio of projects

3. Failure to recognize that different projectsrequire different managerial approaches (Ex. Do

not choose someone who dresses well andspeaks reasonably good English as your ProjectManager all the time)


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End to End Project Management

Technology Impact Assessment

Consulting

Current System Study (As Is Process, Infra)

Business Process Definition (To Be Process,infra)

Customization

Localization

UAT

Roll out

End User Support EndtoEndProjectManagem

ent


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Things dont work out despite

frameworks Short term view

Lets get this done quickly

Technology short cuts

Unclear understanding of technology environment

Not interested in long term sustenance of IT

Business shortcuts

Want to look good fast

Inadequate detailing of business requirements

People involvement short cuts

Wrong skills deployed

What do they want?Never asked. Top down push of IT

Poor change management strategy

Where is the rallying cry?

Poor to inadequate user education


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Organizational Dynamics

Pressure tomeet ST

targets

No time for

thinking through

strategy

No decisionsoverload

Declining

performance


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Overload-fall in productivity-performance degrades-no time for

maintenance/training-overload

Exercise: Overload at the Individual Level

Pick an aspect of your life that feels overloaded.

Can you trace the effect on your performance?

What are the underlying causes of this overload?

What interventions can you see to get unstuck?


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When performance is low what do

managers do?

The Fundamental Attribution Error) Much research suggests that in the situations we

study, people are predisposed towards blamingproblems on other people rather than on the systems

in which they live and work

And, if managers make the FAE how do theyrespond?

More production pressure More oversight

I knew my project was in trouble when I had to give hourlyupdates


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What happens next?

If managers respond with more oversight and

more production pressure what feedback do

they get?

In the short run.

In the long run


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The Self Confirming attribution error

When managers make the FAE, their subsequent interventions provide feedback

confirming their initial attribution

More Production Pressure:

Leads to a short term improvement as people focus on production at the

expense of capability

Leads to a long run degradation as capability declines

More Oversight:

Creates more work, thus exacerbating the smarter/harder tradeoff and the

work is not going to wait

Eventually, forces people to take short cuts, which when discovered provide

more evidence confirming that the people are the problem.


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Consequences of Self Confirming

Attribution Errors

Measurement systems become increasingly shortsighted and restrictive ...supervisors were evaluated on labor performance on a daily basis.

Penalties for missing targets become more severe

...supervisors who missed their targets knew they were going to get beat upby their managers.

the only thing they shoot you for is missing product launch

Line workers invent new methods to insure they are never penalized.

It didnt take long for them to develop a buffer in front of their line sothat if the schedule called for 700 and their line was fully utilized at 800,

they could still run 800 units every day, and still make their laborperformance.

The organization becomes increasingly focused on compliance


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FAE

Performance

Degrades

Need more

accountability,

controls

People working

for me are lazyoverload Fundamental Attribution

Error


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Why they dont think much of you

either

When firms get caught in the capability trap and the selfconfirmingattribution error, what do senior leaders do? They spend a lot of time on fighting fires, providing oversight, and fixing

specific problems

And very little time on developing strategy, setting priorities, and thinkingabout the system

Paradoxically, this approach to leadership increases stuckness Without clear priorities you cant kill project 26 (since its a good project)

Senior leadership oversight creates more work for those closer to the frontline and often feels ceremonial and disconnected from the real work

Leads to initiatives that are inconsistent with the underlying time constants ofthe operating sites


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Why cannot the project be killed

Its a good project!

Good managers can meet stretch goals (and Im agood manager)

Making difficult decisions would imply that we: Had a strategy that we could use Could talk to each other in productive ways

Its very hard to do either when youre overloaded


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Blame leaders, others

Declining

performance

We cannot make

decisions

We dont have time

to reflectoverloadThe what on earth do

they think they are doing

loop


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Project Management and FAE

Productivity falls

No time for

strategy

Declining

performanceoverload Early stage work

neglected

What are they

thinking?

My people are

lazy


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Fix things now or work on longer term

capability

Capability

Invest in capability Capability erodes

Time

Time spent on

implementation/impr

ovement

Actual

Performance

Desired

Performance


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Work harder or work smarter

Capability

Invest in capability Capability erodes

Time

Time spent on

implementation/impr

ovement

Actual

Performance

Desired

Performance


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Pick one

Working harder yields better before things get

worse

Working smarter yields worse before things

get better


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How to manage therefore?

Manage capacity

Complement bottom up with top down

Manage worsebeforebetter

Focus on eliminating defects with the best cost/benefit ratio

Change your habits around problems

Respond to a screwup as though it were a capability problem

Have a clear strategy and live by it


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Manage Capacity

It is hard to avoid getting stuck if you take on more work than you have the

capacity to do

Capability development and defect elimination inevitably suffer (just do it

doesnt)

Most organizations try to do this (if at all) with a bottom up approach

Start with all the work you want to do

Estimate resources requirements

Add it up and cut everything that falls below the water line

While necessary, this rarely works on its own

Individual task estimates are notoriously unreliable

We have a strong psychological tendency to assume that everything will proceed

according to the best case

It is very easy to say we can make space for one more


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Top down approach

Keep good records of what you accomplished last year (or quarter)

Compare what you did last time with what you are planning on doing this time

If you are planning on doing more this year than last you better have a good story

for why this is feasible

Its not unusual for these to be off by more than a factor of two

HarleyDavidson made huge progress just by recognizing that they could not

do more than one big project a year


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Manage worse before better

Pick the capability investments and defectelimination projects that have the biggest bang

for the buck

Start small and do lots of little projects

Make sure you reinvest some portion of eachsuccess in another project


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Change habits around problems

We all make the Fundamental Attribution Errorand suffer from its consequences. The trick is tochange your habits around how you respond toproblems.

From a manager of a successful initiative: There are two theories. One says theres a problem,

lets fix it. The other says we have a problem,

someone is screwing up, lets go beat them up. Tomake improvement we could no longer embrace thesecond theory, we had to use the first.


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Clear strategy and living with values

For the people that you lead:

Spend time on clearly articulating your priorities in concrete ways;operational examples are key!

Make it very clear what is supposed to fall off the table when people

are in a resource crunch; they are just as prone to overcommitting asyou are

Praise them like crazy when they make the difficult decisions

For the people that lead you:

Ask for clear priorities and dont continue the conversation withoutthem

Dont sign up for more than you can do (even if you are pushed)

Escalate when you are being pushed off your agreed upon values andstrategies with concrete examples and data (pay now or pay later)


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Develop ability to have real

conversations

This would only work if we told each the

truth, wouldnt it?

this requires having conflict. Intriguing

research shows that top management teams

with moderate conflict have high performance

than those with no conflict.


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Fast Decision Making in Tech

EnvironmentRapid Decision Making in fast moving, and ambiguous environments iscritical and helps to mitigate overload

Best Practices for Speeding Decision Making (from a multicasestudy of computer firms): Counterintuitive: faster decision making involves considering more

simultaneous alternatives than slower firms

Considering more alternatives prevents costly revisits, is more easy toevaluate than decisions in isolation, and reduces escalation of commitment topoor options e.g., hard to buy a car without looking at multiple cars

Use of experienced counselors speeds decision making: Hasten development of alternatives, and mitigates lack of confidence

Use of active conflict resolution speeds decision making


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Decision Making Velocity and

Performance

Faster decision making has been repeatedly

linked to higher performance in these settings

Slower decision making produces worse, not

better outcomes as the environment changes

and firms fail to make some critical decisions


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Risks in Project Management

It is risky that is why benefits are so high

It can yield big benefits thats why it also so risky

Project Proposal will include:

Why is it required? Financial benefits (time, money), qualitative benefits (reduce stress, increases csat)

What does it take to happen? Time, money, people, processes, technologies, partnerships

Scope of project and what is not in scope What constitutes a change? How will change request

be managed?


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How to recognize if a Project is HIGH

RISK

Project size Large budget (relative to historical spend)

Many functions, teams, departments involved

Long duration (more than 6 months)

Experience with technology Poor knowledge of h/w, s/w and other technologies

used

Introduction of new technology

Changing requirements If the goal post keeps changing or any reason, project

is at higher risk of failure


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Framework for Visualizing Project Risk

# of risk factors

Proje

ctRisk

1 2 3

Moderate risk

High risk

Very high risk

Hi Requirement

Volatility

Low Requirement

Volatility

Low tech Spreadsheet: sales

forecast,budgeting,

production

planning

Roll out BlackBerry

Hi tech ERP for Demand

Planning,

Production

Planning

Roll out ACD, VoIP,

IVR, CTI apps in call

center

Use this to communicate to all

levels before, during and after

project


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Practical ways to understand Project

Risks

Review Questionnaire on Page 458

Stop being a hero, lone ranger

Be honest and transparent with leadership

and all levels


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Expectation setting during Projects

Cut over is never smooth

Business users will doubt IT team

at cutover since everything will

be difficult at that time

Organization culture becomes

clearly visible at cutover time: is it

supportive or do people look out

for themselves

Projects can collapse during

cutover

Need to constantly educate about

short term dip before

performance picks up

Need to be all hands on deck at

cut over to quickly identify Very

Urgent, Very Hi Priority problems

and to solve them

Project and Account Managershave to stop selling the wonderful

vision of how things will look

after cutover


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Risk-Return of Portfolio of ProjectsAlways take a Portfolio view and not one off

New

Projects

Ongoing

Projects

Project Benefits

ProjectRisk

New CoreValue

NewBenefits

ImprovedBenefits

Variation

V.High

High

Medium

Low

Are projects aligned with

strategy?


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Tools to manage projects

External integration tools

Internal integration tools

Formal Planning tools

Formal results control tools


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External Integration Techniques/Tools

Select a Project Manager

Set up Steering committee with scheduled meetings

Setup change control process

Regular distribution of project team info to teammembers

Selection of right team members

Setup approval process for system specifications

Prototype with end users Create periodic progress reports

Get users involved in key decisions/actions


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Internal Integration Techniques/Tools

Select experienced IT professional to lead tech team

Periodic team meetings (Scrums)

Periodic distribution to team of info on design/testing

Tech status reviews HR interventions to keep attrition low

Select team members who have worked together

Users to participate in goal setting, deadline setting

Get technical assistance from outside


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Formal planning tools

Project management software

PERT, CPM

Estimation tools

Systems Specification Process (PRD, SRS, FRS,

HLD, LLD)

Project approval process Post project audit process


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Formal Results Control tool

Current status vs. plan reports

Change control discipline and systems

Milestone reviews

Root cause analysis for deviations from plan


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TOOLS FOR PROJECT TYPES


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Low requirement volatility: Low Tech

Project Characteristics: Simple IT team does not need to engage with business users deeply

Little to no change management requirement

Complex planning not required

Deep dive analysis by IT business analysts into each function not required

Significant time not required from end users to design

End user approval not required for design docs

Type of skills required: Average

Average skill people are good enough

Project Manager can be of average skill

Tech lead can be of average skill

Outcome: Predictable Simple planning tools like GANTT chart, PERT, CPM work fine and give

predictable results

Usually stick to budgets

These are low stress projects


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Low requirement volatility: High Tech

Project Characteristics: Tending to complexity IT team does not need to engage with business users deeply

Little to no change management requirement

Complex planning not required

Needs good understanding and agreement on business process changes

Need close collaboration, detailed documentation, regular meetings to cope with techshortcomings

Deep dive analysis by IT business analysts into each function not required End user approval required for design docs

Type of skills required: High Good skill people are good enough

Project Manager needs to have experience in high tech projects

Tech lead to be highly skilled in area

Outcome: Unpredictable Planning tools are less important than ability to handle tech complexity

Unpredictable effect on budgets

These can become high stress projects


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High requirement volatility: Low Tech

Project Characteristics: Complex IT team needs to engage with business users deeply at multiple times

Significant change management requirement

Complex planning required



Deep dive analysis by IT business analysts into each function required End user approval required for design docs, prototypes, test cases

Type of skills required: Average Tech; High Collaboration People with average tech skills

Business analysts with excellent skills required

Project Manager needs to have significant experience

Tech lead to be average skilled

Outcome: Unpredictable Planning tools are less important than ability to handle tech complexity




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High Requirement Volatility: Low Tech

Project leader has to be very high in hierarchy Steering committee to meet and evaluate periodically

Break project into manageable milestones

Formal user review and approval at each milestone

Communicate formally; distribute minutes after eachmeeting

Adhere to all milestone timelines

Keep people attrition low, because project knowledge

goes away End users have to drive these projects and never

technologists. So role of BUSINESS ANALYSTS is vital


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High Requirement volatility: Hi Tech

Project Characteristics: Complex IT team needs to engage with business users deeply

Good change management process requirement

Complex planning and control methods required



Deep dive analysis by IT business analysts into each function required End user approval required at all levels

Type of skills required: High Good domain, good technical skills

Project Manager needs to have deep experience in such projects

Tech lead to be highly skilled in area

Outcome: Unpredictable Planning tools are less important than ability to handle tech & requirements complexity



Excellent leadership required to guide through difficult times


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Challenges in Project Management

Volatile requirements, rapid technology changes

Vendors require significant upfront payments

Poor work ethics and focus on short term: People look for salaries and not learning so hop jobs

Leaders want quick results: ruthless, greedy, low integrity

Outcomes are uncertain

Time taken for completion is uncertain

Old h d dd h ll i


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Old method to address challenges in

PM SDLC: System development life cycle

Analysis & Design Analysis: IT + Business users/consultants

Design: IT

Establish: What has to be done? Why (Cost-Benefits)

Build

IT builds Alpha, Beta tests

Intense collaborations between dev, UI design, Testing, Documentation teams co-locatedor dispersed or outsourced

Close controls to stick to time & budget

Implementation IT and End Business user work in tandem

Management of Testing, training, disruption of normal working Operate & Maintain

Migrations, bug fixes, ongoing customer support, indexing

Keep the fires burning

N h d dd h ll i


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New method to address challenges in

PM

Adaptive Methods Iterate: start with rough outline of requirements and

learn as you progress.

Design, build and implement in small bites and test

before moving to next bite Fast cycles, frequent outputs. Discourage long lead

times and variable delivery times.

Give small, logically complete features to end users sothey can tell you if it is useful

Requires highly skilled people to learn and do

Avoid ROI computations. Instead go with marketneeds and size of market


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SDLC Adaptive

Extensive upfront planning toget everything right

ROI calculations done way in

advance Little scope for

accommodating new use cases

Tend to over engineer

Tendency to ignore complexity,looming disasters

Ego of people involved isgiven more importance

Little to no upfront planning.Learn as you go.

Based more on market size for

product Very flexible. Easily

accommodate

Deliver what will getconsumed

Can easily test and fix withoutburning time or budget

User needs are given moreimportance


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Blending agility with rigor/consistency

Simple tools to ensure agile model is also a

consistent and not a totally fluid model:

Flow:

Understand the context: Create flow charts so people knowwhat happens and in what order and when. Get the picture!

Completeness:

Details: what needs to be done, by whom, when, where,

why and how. Build checklists!

Visibility:

Create Trust: publish progress reports on charts that

everyone who needs to can access. Physical or online.


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DISCUSSION

Weill and Aral IT Asset Portfolio Diagram


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Viewing IT as a Portfolio of Assets

Spend: Expenses (Ex. cartridges, paper, website design)

Assets: PCs, Servers, Printers, Scanners

Investment:

Risk/Return trade off

Strategy aligned to IT investment:

Short term / long term risk return payoff

4 M t Obj ti f


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4 Management Objectives for

investing in IT

1. Transactional

Cut costs, increase throughput for the same cost

Examples: Core Banking, Core Insurance, Stock

Trading Software, Railways reservation

2. Informational

Provide information to Manage, Control, Account,

Report, Communicate, Collaborate or Analyse Example: CRM, Sales Management, BI

MIT Sloan CISR


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The Strategic Approach

3. Strategic

Gain competitive edge

Examples: ATMs, Hand held Trade Promotion

Management devices, GIS based vendor mapping

4. Infrastructure

Essential foundation like electricity

Laptops, printers, servers, networks, databases

MIT Sloan CISR

H i t i ll t


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How is money typically spent

on IT?

54%: Infrastructure

13%: Transactional software

20%: Information systems

13%: Strategic Systems

MIT Sloan CISR


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Infrastructure: Features/Benefits

What it can do

Business integration

Business flexibility

Reduced marginal costof BUs IT

Reduced IT costs

Standardization

Returns

Higher market valuation

Faster speed to market

Smaller short runmargins

Lower Return on Assets

MIT Sloan CISR


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Transactional: Features/Benefits

What it can do

Cut costs

Increase throughput

Returns

Higher sales per assets

Lower cost of goods

sold 25-40% return

MIT Sloan CISR

l


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Informational: Features/Benefits

What it can do

Increased control

Better information

Better integration

Improved quality

Returns

Superior quality

Premium pricing

Larger margins

Higher ROA

MIT Sloan CISR

MIT Sl CISR


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Strategic: Features/Benefits

What it can do

Increased sales

Competitive advantage

Competitive necessity

Market positioning

Returns

50% fail

Few spectacular

successes 2-3 year lead

Premium pricing

More sales frommodified and enhanced

products

MIT Sloan CISR

prioritizing and selecting it projects - lecture notes

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