19 August 2011

What does technology project “success” mean to you?

I’m sure many of you are familiar with the common Venn diagram of “project management success.”
FIG PM Budget-Time-Quality
PMI (Project Management Institute) and others advocate that a project is successful if it is on-time, within the budget, and of high quality (or, at least, meeting the project’s original standards for quality). Of course, this is true when compared to the alternatives of over budget, late or of poor quality.

But, in the business world, we shouldn’t undertake projects—any kind of improvement project—for the sake of the project itself. So, while this might a satisfactory view of the project manager’s or the project team’s performance, it really doesn’t tell us very much about the net effect on the business.

Another popular Venn diagram used relative to technology deployments is the processes-people-technology one.
FIG PM Processes-People-Technology

Here the aim is assure that the technologists involved in the project carefully consider the business processes that must be supported by the technologies deployed. Furthermore, the IT folks should also understand the people involved and they will desire to apply and benefit from the new technologies.

However, once again, we should be reminded that a business enterprise should never undertake any kind of improvement project merely to automate business processes for automation’s sake. Nor should they undertake an improvement project with the sole aim of people-pleasing.

In a for-profit organization, there are proper metrics to use for IT decision-making, but these are not the ones.

Consider, for example, the business that spends $150,000 on an IT project. The project is deemed to be “a resounding success” based on the following results:
  1. The project was completed on time
  2. The project was completed under budget
  3. The project met all of the initial quality requirements
  4. The project’s technology deployments properly supported the intended business processes
  5. The project’s new technologies were well accepted and utilized by the people involved
  6. The company was no worse off after this major undertaking (and everyone has heard the horror-stories of huge IT failures)
So, the project management team all got big pats on the back and a few VP’s got bonuses and all the stockholders and stakeholders are pretty happy about the whole “successful project” thing.

But, my question is: Should they be happy?

They just spent $150,000 with an admitted ROI (return-on-investment) of a big fat ZERO!

To me, that’s just not good business!

There is a Venn diagram that I, personally, have never seen, but it is the one Venn diagram that makes sense for business investments of every kind because it includes the three factors that should always be considered for “success.” Here it is.
Here are the questions that should be asked about every improvement project—IT-related or not:
  1. How much does the project increase Throughput (where Throughput is defined as revenues less truly-variable costs directly linked to producing the revenues)?
  2. What affect does the project have on Operating Expenses? Do they go up or down? If so, by how much? Is the change “real” or a calculation based on “savings” when no one will actually be laid-off or no additional Throughput will consume the man-hours “saved”?
  3. How much will our Investment change? Besides (as in our example) the $150,000 we will invest in the project itself, will our inventory go up or down? Will we need to invest in new buildings, or can we sell off some capital equipment and increase our cash?
When you have the answers to these questions you will have the answer as to whether your technology project was just a “project success” or a “business success.” And, while the numbers may not be precise, knowing that they are approximately right will give you far better understanding of your company’s success or failure than not considering them at all.

What do you think?

[Cross-posted at Kinaxis Supply Chain Expert Community.]

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