Managing Large Complex Business Transformation Programs – 6 Key Considerations for Customers and Suppliers
The majority of large IT programs are expected to deliver a business or process change. These are major change management initiatives that will alter the way an organization operates, including what work it performs, by whom, where and with what processes. However, it has been observed that most large IT projects are usually delayed and go over budget. Have you ever heard of a multi-million dollar project, that did not run into problems that resulted in budget and schedule overruns? This is especially true for projects that deal with new technologies or multi-million/multi-year/multi-country rollouts, as well as business transformation projects where technology, geographies and partners are integrated.
A recent McKinsey report analyzing 5,400 IT projects summarized: “Our research, conducted in collaboration with the University of Oxford, suggests that half of all large IT projects massively blow their budgets. On an average, large IT projects run 45 percent over budget and 7 percent over time, while delivering 56 percent less value than predicted. Software projects run the highest risk of cost and schedule overruns.”
As an IT consultant for major global organizations, we’ve outlined 6 key considerations for successfully managing large IT programs.
In today’s changing business dynamics, the CIOs’ mandate, apart from being a business enabler, is also to evolve in order to lead the business transformation initiative. It becomes all the more important that large IT programs are implemented within budget and on time. Given this, what should customers and suppliers do to ensure program success? Based on our experience in delivering large, multi-faceted business transformation programs for global clients, we believe that if organizations, including customers and suppliers, are able to focus and effectively manage a few key elements of the program, then they are sure to succeed. Listed below are 6 key considerations for successful management and execution of large IT programs:
- Anticipate, accept and minimize complexity. Stakeholder management complexity increases exponentially because of the involvement of many different business and technical units with disparate goals and objectives and because of the high degree of change happening. These projects affect and involve teams beyond the project management office and often even beyond the team that initiated them.
- Having the right contractual agreements. A clear and explicit statement of scope of work, performance requirements including SLAs if any, etc. need to be brought outright into the contract. This will avoid any future issues that may arise at the time of fulfillment of the contract.
- Getting the right structure and seniority. As programs become larger and more complex, effective management becomes proportionally more significant. For these programs, the consequences of decisions on how well the program is to be managed, with commitment to communication and coordination, will far outweigh the outcomes of how well a specific technical role is performed. The tighter the schedule, the more this need is magnified. Senior management involvement ensures project alignment with the plan, timely identification of potential threats, proactive mitigation of risk areas and, most importantly, effective decision making.
- Define vision and success criteria. It is critical to define and share the program vision and success criteria with the team, both of which need to be defined for every milestone and every deliverable. The sheer volume of potential communication channels could derail the program if the entire program team is not aligned with these expectations.
- Evolutionary project management. Business transformation programs require a different approach than do traditional, linear projects. The impact of complexity on projects is so great that unless new methods are developed that allow traditional project management approaches to adapt, it will be difficult for project managers to effectively manage projects and drive the desired results.
- Adaptive software engineering process. One of the key reasons for failure of projects is incorrect understanding of requirements, not to mention the frequent instance of changing the scope of projects. A flexible and adaptable requirements gathering process should be an inherent component of the program, to accommodate changes in an appropriate way.
Each of the above areas play an important role in the success of large, complex transformation programs, and deserve a detailed understanding of their role, impact and interplay with other business activities. In subsequent blogs, we will discuss the impact of each of the above in detail and how they will ensure the success of complex business transformation projects.
This post was originally published on Biztech2.com on June 3, 2013, and is re-posted here by permission.