Ask the Experts
ASK THE EXPERTS: Building Value into Every Project
The economic conditions over the past few years have changed the way organizations evaluate and invest in IT. How have these conditions caused companies to rethink the way they approach projects?
Cameron: Well, first off, it’s no longer sufficient to think about project success based solely on criteria such as budget, time, and scope. Due to restrictions on resources, from the top down a greater focus is being placed on executing projects consistently and expecting initiatives to drive aggressive returns.
Sujoy: Absolutely. Project Leaders are challenged to understand potential value and demonstrate the realization of that value after implementation has been completed. This calls for formalized practices around how to measure progress and project success, in addition to budget and time. Whether it is an Enterprise Resource Planning (ERP) project where we are helping a client keep up with the next generation of SAP technology or defining business re-engineering initiatives, the focus is on driving continuous improvement and innovation for the long term.
So with that said, what are some of the key practices being adopted to properly define and measure successful projects?
Sujoy: Essentially, the main practice is to focus on business and IT alignment. The purpose of most IT organizations is to enable the business to reach company goals through the delivery of creative technology solutions. So it would make sense to ensure there is complete alignment between the business and IT for any project. Historically, that has not always been the case. Today, however, it’s imperative that objectives are clearly outlined and understood on both sides.
Cameron: In addition to getting business and IT on the same page, sound practices around justifying investments that involve stakeholders across the business are essential. Executives must understand the expected ROI for their spend. Beyond this, project teams must also deploy practices around benchmarking performance with KPIs that are directly tied to business value. They must design a solution to ensure the realization of that value, and build project teams with talented members who have the ability to achieve the project’s goals.
Talk a little more on the relationship between justifying a project and realizing value from a given initiative.
Sujoy: The practice of justifying each project helps to carve out costs and set expectations for how the solution will return value upon completion. This is essential, but this practice should not be the end of the “value” story. In addition, the justification should also substantiate the basis for measuring go-live success, and support project scoping. Most project teams have a formal justification process – usually resulting in a business case as a product – which often times is used to obtain funding. However, once the project is “green lighted” only a fraction of those organizations carry the business case forward and use it to assess project value during and after the engagement. We see a lot of customer business cases get stuffed into a project file and no longer used for the remainder of the project.
So it’s easy for the team to lose focus when business justification is forgotten once a project starts. What are some ways to close the gap between project justification and value realization for a project?
Cameron: It’s important to understand what causes the separation. Two major issues cause this disconnect – 1) Poor knowledge carry-over from discovery to execution and 2) Lack of integrating value realization practices into the implementation methodology.
We see the first failure point when a team is tasked to perform discovery and write the business case, and then is redeployed to another initiative while the business case awaits approval. Once the case is approved, another team steps in to perform the actual project execution. The shuffling of teams causes key challenges and drivers identified by the discovery team to be lost or forgotten by the execution team.
The second failure point is caused when projects are measured on traditional constraints such as time and budget instead of the amount of value achieved. Projects that are delivered on time and budget provide no real benefit to the business if they don’t deliver value upon completion. For many SAP projects, for instance, the value is in improved operational efficiency, better reporting and analytics, and an ability to respond rapidly to changing business requirements.
From a macro level, how do organizations look at portfolio management to deliver business value across all new initiatives?
Sujoy: It’s vital for a business to have a road map of the identified initiatives for the next three to five years. That is where an outside organization like Stefanini TechTeam can help define, list and then prioritize key initiatives based on the direction of corporate strategy. Once prioritized, a road map can be defined based on success factors and constraints – such as budget, dependencies, and business cycles.
This road map is leveraged down the funnel to the micro level, guiding project teams into business case justification. The main objective here is to link high-level planning down to project execution with the focus always on realizing and driving business value.
