IT PROJECTS: GET SMART
To build better IT projects, start by building a better project manager.
By Peter Krass

"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 companies are finally getting some religion around this large, and largely frustrating, capital expense. They may 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 conceived 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's 2002 survey of more than 13,500 IT projects in the US. While these figures are significantly better than they were a decade ago, the feeling of continuous 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 fiascos that consume massive quantities of money, talent, and time unless they truly help the organization. "At the end of the day, C-level executives 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 senior research analyst Melinda-Carol Ballou eliminated redundant IT projects and saved $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 the organization'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, estimates Primavera Systems, a vendor of project software.

CFOs may be amazed to find this approach described as new. But J. Kent Crawford, CEO of PM Solutions, a consulting, research, and training firm in Pennsylvania, says that in courses he teaches on effectively running IT projects, 80 percent of attendees can't even list (let alone manage) all their ongoing projects. "In IT, the term 'project manager' has been around for a long time," he says, but the title is almost meaningless.

The More, the Warier

Some companies approach the issue by establishing a PMO, or project management office. This group, typically made up of senior executives, reviews all project proposals over a certain dollar value, compares them against the organization's overall strategy, and then decides yea or nay.

Siemens Enterprise Networks (SEN), a Florida division of the German conglomerate that makes communications-network equipment, has had such a team since 1998. Funding for the program has been surprisingly easy to justify, explains Kandi Miller, SEN's vice president of information management and head of the project committee. "We found that just one blown customer project and one internal initiative that didn't come in on time could basically justify the program for the first couple of years," she says. "The savings were that great."

SEN's project team does not actually manage projects, but instead helps determine whether they are worth doing at all. In the past nine months, the team has evaluated 12 proposals and given the green light to three. The number has been kept fairly low, since SEN is now in the middle of installing a massive SAP ERP system.

Vital support for the effort comes from Roland Meinzer, CFO of Siemens Information and Communication Networks Inc, SEN's parent company. Previously, Meinzer was CFO of Siemens Canada, which went through what he describes as a "traumatic" SAP implementation. Determined to avoid that in the US, he pinpointed one key to success: the involvement of people not working directly on the project. "Business owners are often blind to process improvement, because they live in the day-to-day world while the CIO is very often driven by his IT tools," Meinzer explains. "You almost need to have somebody who brings a different view."

Even more ambitiously, parent company Siemens AG is working to create a companywide project team that would not only prioritize and coordinate all major IT projects, but also set standards for software tools and procedures as well as streamline global processes.

Siemens isn't alone. Ballou of Meta Group estimates the market for project-portfolio management services and license revenues is now a sizable $450 million and growing, with most of that now going to consulting firms - in fact, Meta has been a vocal champion of the approach. "The key will be, how quickly do people see results they can build on?" she says.

The point is well taken, because simply installing a project-portfolio team doesn't guarantee success. For one thing, the IT community can't seem to settle on a rationale for the team. Is it there to provide a single point of contact or a consistent approach? Or is it to prevent failures or support strategic initiatives. A survey late last year, by Interthink Consulting, a project-management firm in Edmonton, Alberta, found that 180 PMO executives were almost equally divided on the team's purpose. Lack of agreement on the PMO's basic mission can make it difficult to gauge results. In the same survey, fewer than half the organizations surveyed said their PMO is a significant component of project success. Worse, 12 percent said it has made no real contribution at all.

Software Tools, Hard Results

If organizational structure doesn't succeed, technology may. A growing list of software vendors offer products that aim to help IT departments manage, track, evaluate, prioritize, and generally improve their projects. These products range from PC-based tools for individual users, such as the ubiquitous Microsoft Project, to Web-based suites that serve an entire enterprise, from such vendors as Changepoint, Fortera, ITCentrix, Niku, Primavera, Pacific Edge, PlanView, and Prosite.

These tools have become one of the software industry's fastest-growing sectors. The market for all packaged project-management software is currently worth about $1.5 billion, estimates Dennis Byron, a market analyst at IDC, and sales are growing at roughly 15 percent a year - three times the growth rate for the overall packaged software market. It's a world that Byron describes as "Microsoft and everyone else." Microsoft controls about 43 percent of that $1.5 billion, and shows no sign of ceding any ground.

A second category of software aims far higher: it would help entire enterprises manage their IT project portfolios. Some of these packages are designed for senior executives, while others serve a broader swath of the enterprise by providing different views for people in different job functions. One such package is Primavera's TeamPlay which lets IT professionals objectively measure how close a given project is to completion. Again, you'd think IT folks had figured out this problem long ago. But the truth is, estimates of completion are often meaningless to anyone other than the person making them .

Shine a Little Light

TeamPlay lets users define "completion," then apply that measure to all projects. That helps managers catch troubled projects early - and shut them down if need be. "History says that if a project is 20 percent off at 20 percent of its life cycle, it's never going to catch up," says Michael Shomberg, Primavera's vice president of global marketing. "So we try to help customers catch it early."

James Lester, CIO of American Family Life Assurance Co (better known as AFLAC) in Columbus, Georgia, and a user of TeamPlay software, hasn't canceled any projects yet, but after about six months of running the software, he says visibility on the company's 60 ongoing IT projects has improved measurably. "I feel like I'm not flying in a fog anymore," he says. "It's great to be able to see what's going on."

Some enterprise project software can even change the way the IT group relates to the rest of the company. That's the intention of Avery Cloud, CIO of Integris Health Inc. in Oklahoma City, a statewide network of hospitals, clinics, and other medical facilities. Using project software from Changepoint, Cloud hopes to eventually institute a monthly charge-back for his group's IT services.

Getting business units to accept fees requires hard data, Cloud says, and that's exactly what the Changepoint software is designed to provide. At one point, other senior executives at Integris questioned whether his IT team was busy enough. The figures were pulled out from the Changepoint database and showed that five of the IT staff (out of 180) had actually worked 60-hour weeks for the past four months. "It knocked them out of their chairs," says Cloud.

Certifiably Project-worthy

While PMOs and other teams stress savvy management over sexy technology, another way that companies can boost the intellectual horsepower behind IT projects is by investing in the project managers themselves. Taking a cue from the construction and civil-engineering professions, where project managers are common, some in the IT community are pushing for more training, even official certification. Not surprisingly, many of those advocating this approach - standards groups, professional associations, and consultants - stand to benefit from such a change.

One such group is the Project Management Institute. Based in Pennsylvania, PMI offers widely accepted project-management guidelines and certification, called PMP, for project-management professionals. More than 50,000 people have received the PMP certification, and in January, Microsoft chose the PMP certification program as the standard for its entire services group, which has 12,000 employees.

Caveat Vendor

Despite all this work to improve IT project management, some in the IT industry argue that only the symptoms are being treated, while the real causes remain untouched.

Tom DeMarco, principal of the Atlantic Systems Guild, a technology consultancy, claims that the big problem with IT projects lies in the setting of deadlines, often by senior executives. "There's a competition to set unrealistic expectations, with no accountability. If you're the manager of a software project, there's a lot of accountability. There's none for setting a wrong expectation in the first place."

Another often-overlooked source of IT project trouble involves contracts. Many involve third-party suppliers of hardware, software, and services, yet few IT managers know how to negotiate a contract that allows problems to be remedied without time-killing trips to court. "We try to get both parties to understand, going in, what are the most likely things to happen - and even some of the less likely things to happen," says Wayne Bennett, a leader of the technology practice at law firm Bingham McCutchen.

A good contract, Bennett says, spells out what to do if there's a dispute. "If the technical leads get into a tiff, that shouldn't make everyone get their sabers. We lay out the procedure, culminating with a sit-down by the two CEOs, who theoretically can put the dispute into perspective."

All the more reason to get your arms around project management: Do you really want your CEO tied up in negotiations around a project that's months late, over budget, and totally irrelevant?

Peter Krass is a freelance writer and independent consultant based in Brooklyn, New York, and a former editor at Inc., Planet IT, and InformationWeek.