The Siren Call of Certainty

In Greek mythology, the sirens were three bird-women who lured nearby sailors with their enchanting music and voices to shipwreck on the rocky coast of their island. The term siren call, from which this derives, is described in the Free Dictionary, as “the enticing appeal of something alluring but potentially dangerous”. In today’s increasingly complex and interconnected world, it is the siren call of certainty that is luring many organizations into failures akin to shipwrecks, particularly, although not limited to their increasingly significant investments in IT-enabled change. More accurately, it is their failing to recognize, accept and manage uncertainty, that leads to these wrecks.

Yet again here, what we have is a failure of governance, and of management – a failure that starts with how strategic decisions are made. In a recent McKinsey paper, How CFOs can keep strategic decisions on track, the authors make the point that “When executives contemplate strategic decisions, they often succumb to the same cognitive biases we all have as human beings, such as overconfidence, the confirmation bias, or excessive risk avoidance.” My discussion here covers the first two (excessive risk avoidance essentially being the opposite of these, and equally dangerous). Executives are often so certain about  (overconfident in) what they want to do that others are unwilling to question their certainty or, if they do, they are dismissed as “naysayers” (and quickly learn not to question again) or the executive only chooses to hear those parts of what they say that confirm their certainty (confirmation bias). I must admit that I have probably been guilty of this myself, in language if, hopefully, not intent, when I have told my teams, “I don’t want to hear why we can’t do this, I want to hear how we can do it.” What I really should have added explicitly was “…and then tell me under what conditions it might not work”.

To resist the lure of the siren call, we require an approach to strategic decision-making  that is open to challenge – one in which multiple lenses are brought to bear on the decision, where uncertainties, and points of view contradictory to those of the person making the final decision, be that the CEO or whoever, are discussed, and where individual biases weigh less in the final decision than facts.

I am not suggesting here that uncertainties should prevent investments being approved, if they did we would never do anything. I am saying that they should not be buried or ignored – they must be surfaced, recognized, mitigated where possible, and then monitored and managed throughout the life-cycle of the investment. This means acknowledging that both the expected outcomes of an investment, and the way those outcomes are realized will likely change during the investment life-cycle. It means managing a changing journey to a changing destination. Unfortunately, once again the siren call of certainty also gets in the way of this.

When investments are approved they are usually executed and managed as projects, all too often seen as technology projects (I use the term broadly here). In a 2010 California Management Review article, “Lost Roots: How Project Management Came to Emphasize Control Over Flexibility and Novelty”, authors Sylvain Lenfle and Christoph Loch, discuss the history of Project Management, and suggest that the current approach to Project Management promises, albeit rarely delivers, greater cost and schedule control, but assumes that uncertainty can be limited at the outset.”

The origins of “modern” project management (PM) can be traced to the Manhattan Project, and the techniques developed during the ballistic missile projects. The article states that “the Manhattan and the first ballistic missile projects…did not even remotely correspond to the ‘standard practice’ associated with PM today…they applied a combination of trial-and-error and parallel trials in order to [deal with uncertainty and unforeseen circumstances] and achieve outcomes considered impossible at the outset”. This approach started to change in the early ’60s when the focus gradually changed from ‘performance at all costs’ to one of optimizing the cost/performance ratio. Nothing inherently wrong with that, but along came Robert McNamara who reorganized the planning process in the Department of Defense (DoD) to consolidate two previously separate processes – planning and budgeting. This integration was supported by the Program Planning and Budgeting System (PBS), which emphasized up-front analysis, planning and control of projects. Again, nothing inherently wrong with that, but the system resulted in an emphasis on the complete definition of the system before its development in order to limit uncertainty, and a strict insistence on a phased “waterfall” approach. The assumptions underlying this approach are i) as decisions taken by top management are not up for discussion, the PM focus is on delivery, and ii) rigorous up-front analysis can eliminate and control uncertainty – these underlying assumptions are still very much part of Project Management “culture” today.

Again, I am not saying here that there is no need for sound analysis up-front – quite the contrary, I believe that we need to do much more comprehensive and rigorous up-front analysis. What I am saying is that, no matter how good the up-front analysis is, things will change as you move forward, and there will be unexpected, and sometime unpredictable surprises. We cannot move blindly ahead to the pre-defined solution, not being open to any questioning of the outcome (destination) or approach (journey), and focusing solely on controlling cost and schedule. The history of large projects is littered with wrecks because, yes, there was inadequate diligence up-front, but equally, or even more so, because we failed to understand and manage uncertainty – forging relentlessly on until at some stage, the project was cancelled, or, more often, success was re-defined and victory declared.

The article suggests that “Project Management has confined itself in an ‘order taker niche’ of carrying out tasks given from above…cutting itself off from strategy making…and innovation”. Many organizations, particularly those embracing agile development approaches, do apply a combination of trial-and-error and parallel trials in order to deal with uncertainty and unforeseen circumstances, and to achieve outcomes either considered impossible at the outset, or different from those initially expected. But, as the authors say, “these actions happen outside the discipline of project management…they apply [these approaches] despite their professional PM training.”

The tragedy here, with both strategic decision making, and execution is that we know how to do much better, and resources exist to help us do so. Strategic decision making can be significantly improved by employing Benefits Mapping techniques to ensure clarity of the desired outcomes, define the full scope of effort to achieve those outcomes, surface assumption, risks and uncertainties around their achievement, and provide a road-map for execution, supporting decision making with an effective business case process, and by applying the discipline of Portfolio Management to both proposed and approved investments. The successful execution of investments in the portfolio can be increased by moving beyond the traditional Project Management approach by taking a Program Management view, incorporating all the delivery projects that are both necessary and sufficient to achieve the desired outcomes in comprehensive programs of change. Many of the elements of such an approach were initially discussed in The Information Paradox, and subsequently codified in the Val IT™ 2.0 Framework.

We know the problem, we have the tools to deal with it – what is still missing is the appetite and commitment to do so.

The Future of IT

After another couple of month’s silence precipitated by some minor surgery, the holiday season and, quite frankly, too much “same old – same old” news, a couple of articles have caused me to, once again, put my fingers to the keyboard.

The first, a blog – unfortunately his last with CIO.com, by Thomas Wailgum, IT in 2020: Will it Even Exist?, and the second by Marilyn Weinstein, again in CIO.com, The Power of IT Drives Businesses Forward. While the two titles might appear contradictory, I felt they were both saying the same thing in somewhat different ways, and that what they were saying is important – although not new.

In describing a new report from Forrester Research, “IT’s Future in the Empowered Era: Sweeping Changes in the Business Landscape Will Topple the IT Status Quo”, Thomas suggests that the question that lingers throughout the report is whether corporate IT, as we know it today, will even exist in 2020.

In the report, analysts Alex Cullen and James Staten identify three forces bearing down on IT that will likely have long-lasting ramifications. The three forces include: Business-ready, self-service technology (including cloud and SaaS adoption); empowered, tech-savvy employees who don’t think they need corporate IT; and a “radically more complex business environment,” notes the report.

Cullen and Staten write “The IT status quo will collapse under these forces, and a new model–empowered BT [business technology]–will take its place. Today’s IT and business leaders should prepare by rethinking the role the IT department plays and how technology staff engage the business, shifting from controlling to teaching and guiding.”

Well, whether it be these three forces or others, I certainly agree that the status quo is unacceptable and this rethink needs to take place – it should have taken place a long time ago.

In her article, Marilyn echoes a comment I have been making for well over a decade in saying “One of the most overused terms I’ve heard in the past few years as CEO of an IT consulting and staffing firm has to be the word “alignment.” With IT embedded in just about everything that we do, it is ridiculous. and dangerous, to continue to talk about alignment. As Marilyn goes on to say, “IT drives efficiencies. IT enables business. IT powers business success. The goal is not merely to align, but to get in front of the business goals and spearhead growth… IT does drive and enable business. It’s time for IT leadership to drive that point home. ” Again, the long overdue need for IT and business leaders to rethink the role the IT department plays and how technology staff engage the business.

The role of the IT leader, the CIO is indeed changing, or certainly should be. The CIO is accountable for delivering required technology services at an affordable cost with an acceptable level of risk. The business leadership is accountable for investing in, and managing and using technology such that it creates and sustains value for their organization – this cannot be abdicated to the IT function. But nor can it be done without the IT function – they have a key role to play here. The CIO, as the IT leader, is responsible for ensuring that their team works in partnership with other business leadership to help them:

  • optimize value from existing services;
  • understand the opportunities for business change enabled by current, new or emerging technologies;
  • understand the business changes they will have to make to realize value from these opportunities; and
  • select opportunities with highest potential value and execute such that value is maximized.

This requires moving beyond the current culture of delivery – based on a philosophy of “build it and they will come”, to a culture of value. This will further require moving beyond the current approach to IT governance – one that is again focused on delivery and the “factory” to a broader more strategic approach to enterprise governance – one that ensures that organizations have:

1. A shared understanding what constitutes value for the organisation;

2. Clearly defined roles, responsibilities and accountabilities, with an aligned reward system;

3. Processes and practices around value management, including portfolio, programme and project management, supported by complete and comprehensive business cases, with active benefits and change management; and

4. Relevant metrics, both “lead” and “lag”.

The Val IT Framework 2.0™ provides, in Section 6 – Functional Accountabilities and Responsibilities, a summary of the roles of IT and business leadership required to support this approach.

In the Afterword of the revised edition of The Information Paradox, I introduced a Strategic Governance Framework. Since that time, as well as working with ISACA in leading the development of The Val IT Framework, I have continued to refine that framework into what I now refer to as the Strategic Enterprise Governance Framework. Over the next few months, I will be introducing this framework, and describing each of the ten major elements that it comprises.

Moving to such a governance approach is a business imperative, one which is itself a major change programme that will take time to plan and implement, and also for the benefits to be achieved. We will not however come anywhere near realizing the full potential value of IT-enabled change until we do so. It is time to move beyond words and place an emphasis on action. This will require strong leadership, and engagement and involvement at every level of the organisation.

The Real Alignment Challenge

It has, yet again, been a while since my last post – this partly because of both work and personal pressures – I have been helping Diane run one of the largest juried art shows in our province, but also because I haven’t seen anything that caused me to “lift up my pen”. A number of articles and posts that I have seen over the last few days have now pushed me to do so.

Yesterday, I read an interview with my old colleague, Don Tapscott, by Shane Schick in Computerworld Canada  in which he discusses yet another new book, his follow on to Wikinomics –  Macrowikinomics: Rebooting Business and the World (which Tapscott wrote with collaborator Anthony D. Williams). The book is based on the idea of mass collaboration both within companies and between them, with their partners, customers and other stakeholders. Since his first book, Paradigm Shift (which he co-authored with Art Caston), Don has been a visionary in the IT space – he has helped many individuals and organizations, including myself, to have a broader understanding of what could be. Whilst I would also like to think that I am somewhat of a visionary, I am primarily interested in what it takes to turn vision into reality – a reality where the potential of IT turns into realized value. Unfortunately, the gap between vision and reality (and, by inference, concept and implementation) continues to be large, and, as another former colleague of mine, Michael Anderson, once said (or, possibly, quoted), vision without action is hallucination.

This leads me to the second article by Chris Kanaracus in Computerworld – ERP woes blamed for lumber company’s bad quarter . On first seeing this, I thought here’s yet another ERP failure story to file away which, to some extent it is in that, as the article says “Lumber Liquidators is attributing a weak third quarter to a complex SAP implementation, saying the project imposed a significant drain on worker productivity.”  The article goes on to say that  “…lower productivity led to an estimated $12 million and $14 million in unrealized net sales, according to the company. Net income fell nearly 45% to $4.3 million.” Lumber Liquidators’ CEO Jeffrey Griffiths, in saying that “There were a few things that didn’t work quite right, a few things that were unique to our business that we didn’t see as well ahead of time…” , attributed the problems in the quarter to employees’ having difficulty adjusting to the SAP software, which he nonetheless praised. The article concludes by saying that “The situation differs from other troubled SAP projects, such as one conducted by Waste Management that led to a bitter lawsuit, which was ultimately settled.” It may differ in that it did not result in a lawsuit, and the SAP system is still running, but it certainly does not differ in that the significant loss of income, and the resulting drop in share value of 14%, was due to a problem that could and should have been anticipated and headed off – this did not have to happen! The problem here usually comes down to focusing too much on the technology – not the change that technology shapes, enables and require, not applying due diligence at the front-end – to understand the scope and breadth of the change, and not effectively and pro-actively managing the change. In Lumber Liquidator’s case, this view would appear to be supported by today’s ZDNet Article by Michael Krigsman – Understanding Lumber Liquidators’ ERP failure.

The next article, Business as Organism, Mechanism, or Ecosystem by Bob Lewis in CIO provides some useful insights into the nature and behaviour of organizations today. Introducing the article, he asks “Do you envision your organization as an organism, mechanism, or ecosystem?”

In the case of an ecosystem, he suggests that “The enterprise is organized, if that isn’t too strong a word [such that] employees at all levels interact to further their own self-interest. Furthering the interests of the enterprise is an accidental byproduct at best. More usually it isn’t a byproduct at all. The enterprise is left to look out for itself. And so, organizational ecosystems devolve to silos within silos within silos. It’s no way to run a railroad. Or any other organization, from an enterprise down to the smallest workgroup.”

He then goes on to say that, as a result of this proliferation of silos, “Many business executives choose to view their organizations as mechanisms instead — collections of gears, cams, cogs, levers and buttons, connected so as to achieve a coherent result. It’s business-as-automobile and business-leader-as-driver. It’s the view preferred by process consultants of all religious persuasions … lean, six sigma, lean six sigma, theory of constraints and whole-hog process re-engineering for the enterprise as a whole; ITIL for IT, and other process frameworks (I imagine) for other business disciplines. All start by describing an organization as a collection of processes and sub-processes that feed each other’s inputs and use each other’s outputs to achieve the organization’s purpose… the purpose of the executive in charge … the CEO for the enterprise as a whole and the other C-level executives…Business-as-mechanism is far superior to business-as-ecosystem because mechanisms, whether they’re automobiles, power tools or computers, can and do achieve the purposes for which they’re designed, so long as they’re operated by people who (a) have the appropriate skills to use the mechanism; (b) know what they’re trying to accomplish with it; and (c) have chosen to try to accomplish something for which the mechanism is suitable.” Relating back to the SAP challenge described above,  it is this last statement that contains the root of the problem.  Many executives choose to implement ERP solutions, such as SAP, as a way to address the silo problem. However, if insufficient effort is put in up front as part of the change management process to ensure that managers and employees think beyond their individual silos, have a clear and shared understanding of the purpose of the change that they are being asked to make, and how their roles and responsibilities will change across the silos, and if they are not trained such that they have the appropriate skills to operate in the changed environment, the result will be, at best, disruptive, and, at worst, highly visible outright failure.

Bob then goes on to contrast the above with organizations that operate as organisms, saying that “Unlike mechanisms, the organism’s purpose belongs to every part of it. That’s what lets it adapt to changing circumstances. Feet build callouses, muscles harden and bulk up, skin tans when exposed to more sunlight — each part supplies its own energy and figures out the details of its operation on its own without subverting the overall purpose of the critter it’s part of. Organizations that are organisms are rare because leaders willing to invest the effort to build them, and to forgo the gratification of being the sole driver, are rare. While evidence is sparse … Business Management theory hasn’t yet reached even the level of reliability associated with Economics … what evidence we have suggests organizations that operate as organisms are the most successful in both the short and long run.”

The above caused me to again reflect on Joel Kurtzman’s book, Common Purpose, which I referenced in an earlier post The Traveller Returns, in which Joel provides a very insightful critique of today’s leaders. (As I threatened in the previous post, I will review this book in greater detail shortly). What I took away from Bob’s article, and what I see in my everyday work across the globe is a serious mis-alignment between enterprises whose leaders have an ecosystem mindset, but  adopt mechanistic solutions to change what are becoming increasingly complex organisms – this is the real alignment problem! If we are to solve this problem, if enterprises are to survive and thrive, we need to get away from what I have described in previous posts as the cult of leadership. As Joel says in his book, leaders need to move beyond the traditional “command and control” model to establishing a  ”common purpose” and creating a “feeling of ‘we’ among the members of their group, team or organization”. This will require leaders who can “park”, or at least manage their egos, break down silos, and really engage with and empower all employees – fostering leadership across and at all levels in the organization. Only then will the full potential value of IT-enabled change be realized!

Getting Healthcare Right

I have just returned from a trip to Australia where I gave a keynote speech at the HIC 2010 Conference in Melbourne. I also had a number of other meetings and workshops while in Australia. most around the topic of healthcare and, more specifically, eHealth.

Those of you who read this blog will know that my primary passion is around value – specifically enterprises realizing value from IT-enabled change. What you may not know is that there are two areas where I have worked in the past, and continue to work, where I believe IT-enabled change has enormous potential to deliver real value, including social value – but they have as yet come nowhere near to doing so. These are healthcare and education.

Staying with healthcare, and resisting the temptation to further lambaste the UK NHS’s National Program for IT in Health (NPfIT), my experience, and a review of case studies from a number of countries, reveals two disturbing common features among them. These are:

  1. Much is said about the biggest challenge in realizing benefits/value from major IT-enabled change programs in Healthcare (often lumped under the eHealth umbrella)  being management of change – process and behavioural change – yet little or no guidance is provided on how to manage that change, or even what the major elements of change are; and
  2. Benefits are usually treated as an afterthought, often not well defined let alone evaluated until years into the program.

Basically, the approach appears to be: let’s get the technology implemented first, then we’ll find out what changes are required to “meaningfully use” the technology, then we’ll worry about the benefits. As long as we continue with this technology first approach, we will continue to fall dismally short of realizing the potential benefits of such change – the waste of money is a scandal – the opportunity cost of not delivering on the value promise is even worse. We must move from starting with the technology to “starting with the end in mind”.

Over the last few months, I have been involved in working on a number of case studies of enterprises who have made significant progress in implementing value management practices and developing a “value culture”. In preparing my speech to the HIC conference, I drew on the factors that I found to be common in the success of these enterprises – factors that I believe should be seriously considered in the healthcare context. They include:

  • Shifting the focus beyond technology, activities and cost to focus on change – process and behavioural change, outcomes and value
  • Strong and committed business leadership – change programs must be owned by the business and the business must be held accountable for the benefits of those programs
  • Appropriate business engagement and sponsorship/ownership – change cannot be done to people – it must be done with them
    • Cascading sponsorship – there must be leadership at all levels in the enterprise – this should include “formal” leadership, those appointed to lead, and “informal” leadership, those selected/looked to by their peers as leaders
    • “Front-line”  input and feedback – these are the people who usually know what needs to be done, their voice is all too often not heard
  • Clearly defined governance structure, role and responsibilities
  • Don’t underestimate the emotional and political issues around “behavioural change”
  • Be prepared to change course – both the journey and the destination
  • A strong front-end planning process with inclusive and challenging stakeholder engagement
    • Get “the right people in the room having the right discussion”
    • Use Benefits mapping workshops
      • Build clarity and shared understanding of desired outcomes
        • Recognize and balance/optimize different views of value
      • Surface “assumptions masquerading as facts”
      • Surface, understand and manage complexity – understand the full scope of effort including changes to the business model, business processes, roles and responsibilities, skills and competencies, reward systems, technology. organization structure, facilities and management of change
      • Don’t treat  as a one-time event – revisit regularly through an ongoing process
    • Avoid the “big bang” approach – break work into “do-able” chunks that deliver measurable value
  • Define, develop and maintain standard and complete business cases
    • Clearly defined outcomes
    • Full scope of effort
    • Clearly defined – and accepted – accountabilities (for outcomes – not activities)
    • Relevant metrics, both “lead” and “lag”  – “less is more” – measure what’s important and manage what you measure
  • An aligned and results-based reward system
  • A clear and transparent portfolio management process to select and optimize investments in IT-enabled change
  • Manage the journey
    • Use the updated business case as a management tool
    • A strong gating process for progressive commitment of resources
      • When things are not going to plan, understand why and be prepared to change course, change the destination or cancel the program
  • Manage and sustain the change
    • On-going inclusive two-way communication
    • Support/sustain with one-on-one coaching/mentoring
    • Celebrate and build on success
    • Learn and share

All investments in IT-enabled change are important, but few have such impact on all of us as  those in healthcare (and, I would add, education). We cannot continue to muddle through with technology-centric approaches that are designed to fail. We must learn from past failures. There is a better way. Starting with the end in mind, with strong ownership and leadership, inclusive engagement, and pro-active management of change – managing the destination and the journey – we can do better. We must do better. We deserve no less!

Moving beyond IT Cost to Business Value!

I have been meaning to read KPMG‘s From-cost-to-value-2010-global-survey and today’s CIO Article by Beth BacheldorOutsourcing IT Must Create Value Worth More than Simply Savings, combined with a break between working on a couple of case studies (yes, of course, about value from IT) gave me the opportunity to do so. I don’t intend to review the whole document – it’s only 32 pages, many of which are pictures – but I do want to highlight and comment on what I see as the key points.

The management summary states “In the next few years, CIOs envision a shift in focus from cost efficiency and compliance to value creation and innovation“. I will avoid launching into my usual rant here, but would suggest that those CIOs who are not already well into doing this should be seriously reviewing their career options. The summary goes on to say “The days when IT was seen merely as a means of improving efficiency seem behind us. These days, IT contributes directly to realising the business strategy and has a central role in management. According to CIOs, this requires the distance between the business and IT as small as possible.” Again, I’ll hold the rant, but in organisations who ‘get it’, this has been the case for many years.

The survey goes on to present “eight clear conclusions” which I believe, ranting aside, organisations and their leaders would do well to heed. I will not go through each of these, but rather provide an overall summary (where I have included statements directly from the conclusions these are in bold):

  • IT is no longer about cost cutting – it is about creating value – IT value dominates the CIO agenda. Absolutely! Study after study show, and my experience would certainly support that organizations that are laser-focused on value outperform those that fail to do so. However, there is a danger here of falling into “the tyranny of ‘or’ vs. the beauty of ‘and’ trap, i.e. forget cost and think about value. The survey recognizes this saying that “Cost optimization remains important“. Of course it does and must continue to do so. We should always be looking for opportunities to reduce costs – but must do so in the context of value. The fundamental question that we should be asking is: Are we maximizing the value of our investments in IT-enable change (see my next bullet for more on this) such that we are getting optimal benefits, at an affordable cost, with a known and acceptable level of risk? The underlined words are carefully chosen. If we attempt to maximize all benefits, many of which are in conflict with each other, the result is sub-optimal. If we seek lowest cost, risk goes up. If we avoid risk, we fail to make the changes required for our organizations evolve and grow. Leading into the next bullet, as a Chief of Staff of the US Army once said: “If you don’t like change, you are going to like irrelevance even less.
  • IT value is not only about technology – people are the success factor behind IT value. Right on! IT, in and of itself has no value beyond what you can get for it on ebay – as we discussed in The Information Paradox, it is the change that IT shapes and enables that creates value. It is how we manage and use technology – more specifically how people use the information that technology provides – that enables that change and creates and sustain business value. How well this is done determines the success or even the very survival of organizations. This is far too important to be abdicated to the IT function but, unfortunately, all too often – in organizations that don’t ‘get it’ – this is the case. As the survey says: “Successful IT value creation needs to integrate and align the organization’s Technology, Processes and People agendas…CEOs and CIOs need to ensure that sufficient importance is attached to these aspects during project initiation.
  • Do not expect IT value from a CIO with an operational profile. A CEO once asked me “Why is it that whenever my CIO talks to me he only wants to talk about technology?” My response was “Because you let him!” As the survey points out: “The daily focus of a CIO depends to a large extent on the sector in which he or she operates. In addition, the results show that a CIO’s agenda is also determined by his position in a organization.”  There is, however, also the question of the CIO’s ‘comfort zone’. While somewhat unbelievable, given how long we have been talking about this, it is  regrettably true that there are still many CIOs who either don’t want to engage appropriately with the business, or are simply not capable of doing so. On this topic, KPMG provides a view on CIO competencies: “A CIO should have four important competencies. First, the ability to think like the organization’s customers and to understand clearly what they want. Second, the ability to obtain a good understanding of relevant technology trends and identify their specific business benefits. Third, the ability to manage IT investment for value creation. Finally, the ability to connect well with the organization’s business leaders, to help them unravel he mysteries of technology.” Although not a highlighted conclusion, there is an interesting discussion in the document on the merits of rotating people between IT and the other parts of the business. I have long been a proponent of this and echo the comments of Maarten Buikhuisen, IT Director Western Europe for Heineken Breweries when he says: “The general manager of the future has worked in IT.” (Tesco’s new CEO would certainly be a recent case in point.)

The survey covers a number of other topics, including process improvement, risk and compliance, and new ways of working including collaborative tooling and cloud computing, but I will restrict my commentary in this post to the above. Overall, ranting apart, I found the survey to be a very useful and well written document – one that is relevant to all executives, not just CIOs. They would do well to read and study it carefully.

The Traveler Returns

To quote Mark Twain, “The reports of my death are greatly exaggerated!” Understandable, however, as it has indeed been quite some time since my last post. This is largely because I have been traveling extensively – a mix of business and  personal time – including Toronto, Asia, Alaska, Vancouver, the UK and Greece. Part of the personal time included a 23 day cruise from Beijing to Vancouver. A quick scan of emails on my return – once I eliminated the 90% related to the (aptly named) Cloud –  had me yet again shaking my head and wondering whether I had not been on a cruise ship at all – rather traveling in Dr Who’s police box time machine – backwards! Here are just a couple of examples:

  • In his May 21st blog, Project Managers Need to Engage IT At the Right Time, commenting on a project predictability seminar, Jim Vaughan says “It was noted that problems with requirements management are rarely with the IT organization and process. This caught me by surprise at first because I usually thought of IT, myself included, as the source of the problem.To get to the right requirements you need the right people to define those requirements. These are not the IT people. If we let the IT people define the requirements we will likely get into trouble. That is why people will blame IT for failed projects. The correct people to define the requirements are the business people and end users.” As this is what I have done for more than 45 years – and what I assumed was well understood, if not common practice – I was amazed that Jim should be surprised by this.
  • In a May 24th Computerworld article by Julia King, These CIOs go way beyond IT-business alignment, she discusses “an admittedly unscientific short list of pioneers in IT-business convergence including  The Progressive Corp., Southwest Airlines Co. and The Procter & Gamble Co.” as well as Vanguard Group and Zappos.com where “business and IT are virtually indistinguishable” and “IT doesn’t just support the business; it enables and continually transforms the business, often creating new revenue and profit streams.” I think that this is great – but why, when we have been talking about this for decades, are there still only a small group of pioneers doing this?

On a more positive note, I attended the CICA conference in Toronto at the end of March, where I gave a Val IT™ workshop, and was pleased to have some people talk to me about Val IT before they even knew who I was, and also to discover that an increasing number of organizations, including the Office of the Auditor General of Canada, are using it, or planning to do so.

In May, I presented at the first annual CMC BC Consulting Conference in Vancouver – how could I resist speaking at a conference with the theme “Charting a course to value”. Among the other topics, there was much discussion about social media and networking and I was pleased to see a tweet sent from Chris Burdge of bWEST who was attending my presentation saying that he was finding it “surprisingly fascinating”. He has subsequently invited me to participate on a panel at a  SocialMediaCamp he’s organizing for October. My son, Jer (blprnt), is quite active in the social media scene, and has a digital art practice in which (I quote) he “explores the many-folded boundaries between science and art”. He and I have been spending quite a bit of time lately discussing the intersection of governance and social media/networking – not just the current preoccupation with how to control social media/networking but, beyond that, how it could be used to improve governance, specifically the quality of decision-making, by tapping into a much broader experience/knowledge base. I may need to spend more time with him before October.

After Vancouver, I headed off to Greece to speak at the Thessaloniki Business Conference. There was an impressive line up of speakers, all of whom had a strong focus on value.  Many of the messages resonated with me, including:

  • Professor Leslie de Chernatony, Professor of Brand Marketing Universita della Svizzera italiana and Aston Business School, who spoke about “Growing out of a recession through more effective brand strategies” stressed that that companies needed to focus on value – not price, to move beyond product quality to outcome quality, and to “watch how you invest”.
  • Howard Stevens, CEO of The HR Chally Group, talked about “Unlocking the Science of Sales Development” and reinforced the value and outcome quality messages saying that there is only a 2-3% difference in product quality between the serious players, all products can be replicated, and what really differentiates the players is the “customer experience”. He also discussed the importance of business analytics and contended that we have information management (IM) backwards – we start with the company executives when we should be starting with the customer.
  • Harold Stolovitch of HSA Learning and Performance Solutions spoke on “Maximizing Workplace Performance in Tough Economic Times” and reiterated the importance of really “walking the talk” when it comes to treating people as “your most important asset” and said that study after study shows that the most important performance blocks are failing to set expectations and failing to provide feedback.
  • Jeremy Hope, Director of the Beyond Budgeting Round Table talked about “How to save 20%-30% on costs, by managing operational bureaucracy and the introduction of modern tools for the running of the Finance Department”, claiming that replacing the annual budget with rolling plans and forecasts could save 90% of time currently spent on the budget process. This is certainly in line with my thinking as expressed in The Budgeting Circus.
  • Dr David Hillson, Director at Risk Doctor & Partners, covered the topic of “Managing risk in innovation projects”. In defining risk as “uncertainty that matters”, he suggested that risks present opportunities as well as threats, with both needing to be managed proactively, and made the case that Risk Management addresses both threats & opportunities in a single integrated process.

I spoke on the role of IT in the economic crisis, and the challenge of maximising the value from IT. I made the case that, while Nicholas Carr might say that “IT [as a commodity] doesn’t matter”, how we manage the change that IT both shapes and enables determines the success or even survival of our enterprises, and business leaders must own and be accountable for this –  it is far too important to be abdicated to the IT function.

En route to and from the Greek conference, I read Joel Kurtzman’s book, Common Purpose. The need for leadership came across in most of the above presentations, and Joel provides a very insightful critique of today’s leaders, and the need for them to move beyond the traditional “command and control” model to establishing a  “common purpose” and creating a “feeling of ‘we’ among the members of their group, team or organization”. I will review this book in greater detail in a later post.

On the subject of books, I am also reading Susan Cramm’s latest book, 8 Things We Hate about IT – as always, Susan is “right on the money” and, again, I will shortly post a review. Also, I  have received a copy of Stephen Jenner’s latest book, Transforming Government and Public Services: Realising Benefits through Project Portfolio Management, which I hope to be able to get to soon and – yes – will again be posting a review.

Hopefully, it will not be 3 months before my next post, but, as I will be slowing down somewhat through the summer – if it ever comes, it may be a while before I get back to being as prolific as I have been in the past.

Getting Information Management Right

A couple of recent articles by Thomas Wailgum in CIO.com got me thinking – yet again – about information management (IM – for more on IM see Enterprise IT or Enterprise IM?). The first, Information Wants to Be Free, But at What Cost?, makes the point that the more information that enterprises continue to exponentially collect, the more difficult and expensive it’s going to be for them to understand and disseminate that information. The second, The Future of ERP, Part II, makes the case for change in that after four decades, billions of dollars and many huge failures, big ERP has become the software that no business can live without—and the software that still causes the most angst.

In The Information Paradox, and every time I present or discuss the topic of getting real value from our increasingly significant and complex investments in IT-enabled change, I use the slide below to explain how the way we use IT has evolved.

Slide1

When I started in this business, back in the early 60s, most, if not all commercial applications of IT were automation of existing tasks – where the focus was on doing the same thing more efficiently. I call this the appliance era – applications were stand-alone and very little business change was required (as illustrated by the pie chart on the slide). You could essentially have be given the application for Christmas – plug it in and it would do the job.

In the next era, which emerged during the 70s, things became  more complex. We moved beyond automation of tasks to creating, storing, distributing and manipulating information. The focus here was on effectiveness – using information to do things differently and to do different things. You now had to worry about what information was needed, by whom, where, when and in what form – and people had to be trained and incentivized to work differently. Appliances now had to work together in an integrated way, and the way business was done had to change – I call this the rewiring era.

In the next era, which emerged during the 80s, we began to see what I heard a Northrop Grumman CIO describe as “game changing plays” – changing the rules of existing industries and creating new ones. I call this the transformation era. While the changes might not be possible without the technology, the bulk of the effort required to achieve the desired outcomes involves changes to the business – including the nature of the business, the business model, business processes, peoples roles and skills, organizational structure, physical facilities and enabling technology. Those appliances – now ranging from “mainframes” to smart-phones – have  to work together in an integrated way, not only within an enterprise, but outside it – on a global basis.

Unfortunately, while our use of IT has evolved – our management of it has lagged. In far too many cases, the focus is still on the IT appliance  – “plug it in and the value will flow”. Those days are long gone. We are not today simply dealing with appliances – or with simple appliances – we are dealing with massive organizational and cultural change – transformational change. Change that is enabled by technology, but of which technology is only a small part.

The more that I have though about this, and talked about it, the more I feel that one of the sources of the perceived and real failure of investments in IT-enabled change to deliver the expected business value is that we have still not got the information piece right. (Note that in the following comments, I may appear to, and indeed do, to a certain extent, use the terms data, information and knowledge somewhat loosely. This is not because I do not understand the difference – or at least have an opinion on it – but because terminology in common use doesn’t always make a clear distinction, and I don’t want to bog this post down with that discussion.)

While the amount of data we store continues to grow – Gartner predicts that the amount of enterprise data will grow 650 percent during the next five years, a recent Forbes Insights survey of more than 200 executives and decision makers at top global enterprises found that nearly one-quarter of the respondents cited the availability of timely data as one of the top barriers to aligning strategy and operations today. In an earlier post, The Knowing-Doing Gap,  I quoted James Surowiecki, from his book, The Wisdom of Crowds, where he said “…information flows – up, down and across organisations – are poor, non-existent or “filtered” in all directions, decisions are made by a very few with inadequate knowledge and information, and there is limited buy-in to whatever decisions are made.” So, with an enormous and growing amount of data being collected, at considerable cost, why haven’t we got it right? I would suggest that there are a number of reasons for the current state of affairs:

  1. Knowledge is power
  2. Not knowing what information is relevant
  3. Too much information
  4. Bad data
  5. System complexity
  6. Go with the gut

Let’s examine each of these.

Knowledge is power

Building on the Surowiecki quote referenced above, Sir Francis Bacon was (among) the first to say that “Knowledge is power”. Peter Drucker expanded on this saying “Today knowledge has power. It controls access to opportunity and advancement.” This presents a cultural and behavioural barrier to sharing information and to getting it to (all) the people who need it – one that should not be under-estimated.

Not knowing what information is relevant

In another life, I led a lot of what we then called Information Resource Planning assignments. We would interview key stakeholders in an enterprise to find out what information they required. Once we had their requirements, I always asked one final question: “If you had this information, what would you do differently?” Very few people could answer this question or had even thought about it. Enterprises need to take an outcome and role based approach to identifying and meeting information requirements. Expanding on my earlier question, we need to ask: ” Based on the outcome(s) we want to achieve, what decisions/actions need to be taken, who needs to take them, and what information do they need – where, when and in what format – to take them, and what information do we need to know that things are working as they should be?”

Too much information

Today we are drowning in information and, as per the Gartner prediction above, it is only going to get worse. Even if the information that we require is available, it may be lost in the sheer volume of information – the information noise. This noise level is only going to increase. If we are to cut through this noise to what is relevant, it is even more critical to take an outcome and roles based approach to defining information requirements. We will also need to beyond the traditional reporting metaphor and simple, or simplistic dashboards to much more sophisticated, yet intuitive (see “System complexity” below) analytical and data visualization tools.

Bad data

One of the biggest risks to organizations is “bad data quality.” Results from Scott Ambler‘s September 2006 Data Quality Survey show that 46% of data have some data sources that are a “complete mess” or the data itself has serious problems. In an April 2009 data quality PRO survey of Data Quality in Business Intelligence, 42% of respondents reported minor issues, 50% reported major issues, and 4% didn’t know –  leaving just 1% reporting no problems. A 2007 Accenture CIO survey claimed that the costs of compromised data quality are clear—billions of dollars squandered each year due to mistakes, manual processes and lost business. Of the CIOs surveyed,  29 percent said that they had minimal or limited data quality efforts in place, even for critical systems, and only 15 percent of respondents believed that data quality was comprehensively (or near comprehensively) managed. Indeed, not a single North America-based organization reported that they have a fully comprehensive data quality program today. Information is only as good on the data it is based on. It will take time to implement workarounds for, and fix the mess that we have created. In the interim,  we need, at a minimum,  to know how credible the information is and what confidence we can have in decisions based on that information.

System complexity

ERPs were promoted as one “solution” to the information management challenge, but have  proven a challenge for many enterprises – see ERPs – Can’t live with them – Can’t live without them!. Where they have been successful, they may have done a good job of integrating data across enterprises, but few would describe them as easy to use. Even if relevant information is available, if it is too complex or time-consuming to get at it, people won’t. While somewhat simplistic, I have often felt, and even more often heard that “if I need to be taught how to use it, I won’t use it.” Again, information needs to be relevant, outcome and role based, and easy to access and understand.

Go with the gut

Business intelligence was identified in the 2009 SIM Trends Survey as one of the top technologies that enterprises were planning to invest in. Research reported by Accenture in 2008 found that close to half (40%) of major corporate decisions are based on “gut feel”.  The reasons for this executives cited most often, which reinforce some of the points above, were: because good data is not available (61 percent); there is no past data for the decisions and innovation they are addressing (61 percent); and their decisions rely on qualitative and subjective factors (55 percent). 23 percent of respondents identified “insufficient quantitative skills in employees” as a main challenge to their company, and 36 percent said their company “faces a shortage of analytical talent.” 39 percent of respondents said that IT capabilities restrictions were a major challenge and 27 percent said there was an inability to share information across organizations within their company. I also wonder if this might not also be a bit of the “cult of leadership” where they believe that they have achieved a level of knowledge/wisdom where they don’t need information to make good decisions.

Information and people are the two most important and, in all too many cases, the most ineffectively utilized assets in today’s enterprises. What information is available to people – be they executives, managers, workers, suppliers, customers or other stakeholders –  the quality of that information, and how they use it is a key part of what determines business success or failure – value creation and sustainment, or value erosion and destruction. This is true both for “business as usual” activities and – even more so – for transformational change. If enterprises do not get the information piece right, their transformational efforts, and their survival, will be in extreme peril.

Waltzing with the Elephant

I have just finished reading Mark Toomey‘s Waltzing with the Elephant, subtitled A comprehensive guide to directing and controlling information technology. This has taken me longer than I had thought as the book is indeed very comprehensive. I was reminded as I read it of a comment from an early reader of The Information Paradox who described it as  “a book you want to have read but don’t want to read. If you’re an executive with control over your company’s information technology purse strings, you probably don’t want to read a book this detailed in the intricacies of IT, which is exactly the reason that you should.” But will they? I will return to this point later.

As Mark says in the book’s dedication “Through better, more responsible, and effective decision making and control, we can make better use of information technology, and we can improve the world.” I couldn’t agree more – indeed it is that belief that has driven me for the last 20+ years, and which continues to drive me. There is certainly considerable room for improvement – as Mark goes on to say “…there is a compelling reason to improve the performance of IT use within many organizations.” I would  be even stronger here in that I believe this to be the case in most, if not all organizations.

Waltzing with the Elephant is organized around the the six principles of ISO/IEC 38500:2008:

  • responsibility;
  • strategy;
  • acquisition;
  • performance;
  • conformance;
  • human behaviour.

And the three fundamental Governance tasks that it defines – Evaluate, Direct and Monitor.

Mark does a good job of explaining the principles, and of putting “meat on the bones” of what can be seen as fairly high level and broad concepts. The book is a long, but relatively easy read – helped by Mark’s refreshingly irreverent style, and the many real world examples and anecdotes he has included. Mark also makes good use of models to frame and organize sections, including an earlier version my Strategic Governance framework. Although my brief summary may not do the book justice, what I believe you should take away from it, somewhat adapted and, of course, biased by my beliefs, include:

  1. While much has been written and talked about IT governance over the last decade or more,  progress has been painfully slow. As Ian Wightwick says in his introduction, “…there is a fairly strong case for arguing that the investment in IT improvement has not delivered the desired rate of improvement.”
  2. Slide2

  3. A fundamental reason for this lack of progress is that most IT governance activities  deal only with one side of the problem – the supply side. This is what another Australian colleague of mine, Chris Gillies, calls IT governance of IT –  focused on the IT “factory”. If we are to have effective enterprise governance of IT,  as illustrated in the figure to the right, we also need to pay equal attention to the demand side – business governance of IT – focused on how the organization uses IT to create and sustain business value. For more on this, go to Back to the Basics – the Four “Ares”.
  4. If we are to make progress, there must be the  understanding that governance of IT is an important part of the overall governance framework for any organization, and that governance itself is a business system.  Governance must deal with both compliance (meeting regulatory and legislative requirements) and performance (setting and achieving goals).
  5. Ultimately, the people who should control, and be accountable for how IT is used are the business executives and managers who determine what the focus of the business is, how the business processes are performed, how the authority and control structure operates, and how the people in the system perform their roles. None of these decisions are normally within the scope of the CIO, and so, without the means of enacting any decision, the CIO cannot be held responsible or accountable for the organization‟s use of IT. The CIO should be responsible for administering the system of governance on behalf of the governing body, and accountable for most elements of the supply of IT, but not responsible for the demand and certainly not accountable for the use of IT by the business.
  6. Increasingly, we are not making investments in IT  – we are making investments in IT-enabled change. While IT may be a key enabler, all the other aspects of the business system – the business model, business processes, people, and organization need to be considered. Enterprise governance of IT must  go beyond IT strategy, the IT project portfolio and IT projects to more broadly consider the business strategy, and the portfolio(s) of business investment programmes and business and technology projects that enable and support the strategy (for more on Programme and Project Portfolio Management, go to Moving Beyond PPM to P3M and Get With The Programme.)
  7. It is not enough to just focus governance on new investments. Effective governance must cover the full life-cycle of investment decisions – covering both the initial investments and the assets that result from those investments – assets that all too often fall into what Mark calls the “business as usual” space and receive little attention until something goes wrong.
  8. Essential ingredients of the system for governance of IT include transparency and engagement. Transparency means that there is only one version of the truth – that real, accurate and relevant information flows up, down and across the system to support decision making. Engagement means that, at each level, the right people are involved in the system, in the right way with clearly defined, understood and accepted roles, responsibilities and accountabilities.
  9. Effective governance of IT will rarely be achieved by simply following a standard or a generic framework. Rather, it requires fundamental thinking about the issues that are important, and it requires that the leaders of the organization behave in ways that maximise the value and contain the risks in their current and future use of IT.
  10. Ultimately, while standards, such as  ISO/IEC 38500, and frameworks, such as Val IT™ are useful tools, improving the return on IT investments, and improving governance around those investments and resulting assets is about changing human behaviour. Merely developing and issuing policy is insufficient in driving the comprehensive behavioural change that is essential for many organizations that will seek to implement or improve the effectiveness of their enterprise governance of IT. Behaviour is key…changing or implementing a new system for governance of IT necessarily involves taking all of those people on a journey of change – which for some will be quite straight-forward and which for others, will be profoundly challenging.
  11. This journey of change must be managed as an organizational change programme. While much has been written and should be known about this, the absence of attention to the individual and organisational contexts of human behaviour in plans for IT enabled change to business systems is profound. Where there is understanding of the need to do something, enterprises often then run into “The Knowing-Doing Gap” as described by Jeffrey Pfeffer and Robert I. Sutton in their book  of the same name. As the authors say in their preface, “…so many managers know so much about organisational performance, and work so hard, yet are trapped in firms that do so many things that they know will undermine performance.” They found that “…there [are] more and more books and articles, more and more training programs and seminars, and more and more knowledge that, although valid, often had little or no impact on what managers actually did.” For more about this, go to The Knowing-Doing Gap.

I want to return now to my initial comment about who will read this book. In a recent review of the book, Fiona Balfour described it as recommended reading for academics, students of technology, all IT Professionals and “C‟ role leaders and company directors. The book provides very comprehensive and practical guidance for those who have decided that action is required, but will those who have not yet understood or committed to action read it or, more importantly, take action based on it? Almost a year ago, I was having lunch in London with Kenny MacIver, then Editor of Information Age who, after listening to me expound on this topic for some time, said “What you are saying is that we need a clarion call!” Mark’s book adds significant value to those who have decided to embark on this journey, and he is to be commended for the tremendous effort that he has put into it and for his willingness to share his experience and wisdom – but will it provide that Clarion call? It will play well to the converted, but will it convert? Going back to Ian Wightwick’s introduction, he says “Clearly the purpose of Mark Toomey‟s text is to promote the need for adequate IT governance. It is commendable in this regard, but is only the beginning. Company director (including CEO) education courses and regular director briefings will need appropriate attention with provision of simplified explanatory material and check-lists, as well as encouraging the de-mystifying of the whole business-critical IT issue.”

Despite overwhelming evidence of the need to take action to improve enterprise governance of IT, business leadership – boards, executives and business managers – have shown little appetite for getting engaged and taking accountability for their use of IT to create and sustain business value, or to embrace the transparency that must go with it. I hope that, at least in Australia, the emergence of the ISO standard, and  Mark’s book provide that much needed “clarion call”. History, unfortunately, tells us that it may take more than this – we may still have a long way to go!

Moving Beyond PPM to P3M

Over the last little while, I have been asked to write introductions to, or testimonials for a number of books on Project Portfolio Management (PPM). This has caused me some angst because, while PPM most certainly has its place and is a valuable management tool, the name also unfortunately perpetuates the myth that IT projects, in and of themselves, deliver value. As discussed in an earlier post, Get With The Programme!, we need to move beyond IT projects to comprehensive business change programmes.

The concepts of portfolio management (as related to IT investments) and programme management were introduced in The Information Paradox. While portfolio management has seen significant adoption since then, largely in the form of PPM, the adoption of programme management has been slower, which certainly contributes to the popularity of the PPM term. (It would likely help if we could all agree on a common spelling of program/me!)

I have heard  number of arguments against using the term “programme” including that we are making things too complex by introducing another term, it scares people, and it doesn’t apply to small enterprises etc. The reality is that much of what we are enabling with IT today is complex – very complex, and denying that results in even greater complexity. Taking the programme view facilitates better understanding – shared understanding – of complexity and, as a result, more effective management of change. Regarding scaring people, I always say when I am presenting or discussing this topic that if the audience doesn’t leave both excited and scared, they haven’t “got it”. As Albert Einstein once said “You cannot solve a problem by applying the same thinking that got you into the problem in the first place.” We need to shake people out of their complacency and get them to think and act differently. I also believe that the concept of programme applies just as much to smaller enterprises – appropriately  scaled to fit  size and culture.

Programme management does now appear to be gaining some momentum. In addition to ITGI’s Val IT™, both OGC and PMI have programme-related materials. In a recent research paper, Gartner states “Organisations are discovering that program management is a level of business discipline that is key to delivering business outcomes”. It goes on to say that “We are focusing on a specific research project that addresses strategic program management – an emerging discipline focused around the multi project delivery of business outcomes…we believe that this is the management construct best suited to enable better business engagement, value delivery and risk.”

The definition of Portfolios, Programmes and Projects – as introduced in The Information Paradox, and continued in Val IT – is illustrated in the figure below.
Slide1

Given the above definitions and relationships, I would strongly recommend adoption of the term “Programme and Project Portfolio Management”, or P3M to better reflect both the relationships between portfolios, programmes and projects and the need to have all 3 in place. Indeed, I usually portray this with the “3” in superscript (which WordPress doesn’t seem to like) as I truly believe that it is “P to the power of 3 M”. While all three are necessary, none are sufficient on their own. All three, working together, are needed if enterprises are to:

  • Identify, define, select and execute new investments in IT-enabled change such that they maximize value creation and sustainment, taking early corrective action when this is at risk
  • Make intelligent spending decisions, focusing on spend that creates or sustains value, and avoiding the value destruction inherent in across-the-board (percentage) cuts
  • Ensure that their ongoing investments optimize benefits –  contributing to the creation and sustainment of  value – and again, where this is at risk, take early and appropriate corrective action
  • Deliver business and technology capabilities in a reliable, responsive and cost-effective manner

The relationship between Portfolios, Programmes and Projects, in the context of value management, is illustrated in the figure below.

Slide1

There is an argument that you shouldn’t consider portfolio management until you have dealt with project and programme management, i.e. get delivery right before you determine if you are doing the right things and creating or sustaining business value. I clearly do not agree with that argument – as Peter Drucker said “There is nothing worse than doing well that which should not be done at all!” Portfolio and Programme Management are the vehicles that bridge the gap between strategy and execution – ensuring alignment with business objectives and delivery of value through investments in IT-enabled change by effectively understanding and managing that change. Project management ensures that the technology and business capabilities required to enable the IT-enabled change and the resulting benefits and value are delivered. If we are to realize the full potential of IT-enabled change and translate that into real and sustainable business value, we need to work to all three of these areas – we have no choice!

ERPs – Can’t live with them – Can’t live without them!

A CIO.com article and a blog, both by Thomas Wailgum, caught my attention this week. The first, Why ERP is Still So Hard, and the second, The United Nations ERP Project: Is SAP the Right Choice?. Both caused me to reflect on ERPs – in many organizations now themselves legacy applications.

The first article opens by saying that:”After nearly four decades, billions of dollars and some spectacular failures, big ERP has become the software that business can’t live without–and the software that still causes the most angst.” Interestingly, when we wrote The Information Paradox, the major IT investments at that time were ERPs, and that is where most of the problems where. It appears that not much has changed.  The article goes on to make a number of points:

  • ERP projects have only a 7 percent chance of coming in on time, most certainly will cost more than estimated, and very likely will deliver very unsatisfying results. In addition, today’s enterprise has  little better than a 50 percent chance that users will want to and actually use the application.
  • CEOs and CFOs are still trying to wrap their heads around the financial aspects of your standard ERP package, a most unusual piece of the corporate pie: the licensing, implementation, customization, annual maintenance and upgrade costs. A CFO Research Services study of 157 senior finance executives, found that a typical company will spend an average of $1.2 million each year to maintain, modify and update its ERP system.
  • Manjit Singh, CIO of Chiquita Brands International, makes a key point that the reality CIOs face when synching business processes with those in ERP applications leads to “internal arguments over how we are going to define something simple as a chart of accounts. So all of the sudden, what looked like a very simple concept has exploded in complexity, and now you’re into trying to get some very powerful people aligned behind one vision. In some cases, you can; in some, you can’t.”
  • In a  first implementation, Taser International customized its chosen ERP package to meet the business processes that it already followed. In a subsequent upgrade, they decided to “…get rid of these customizations and go back to the best practices and recommendations out of the box”. Taser International CIO,  Steve Berg, acknowledged that the upgrade took longer than expected: Testing and training issues, as well as certain customizations that were unavoidable, complicated progress along the way.

In summary, the track record of ERP implementations continues to be spotty at best, costs are not well understood – nor are benefits, change management is a huge issue – not to be underestimated, and there needs to be an appropriate balance between “out of the box” and rampant customization.

So, let’s now look at the UN situation. My first reaction was one of relief that I did not have to do this. Not that it isn’t most likely needed, and could contribute to improving the UN’s efficiency – which is certainly a noble goal – but that it appears to a close to impossible  challenge. What are the chances of the now $337 million project actually coming in on budget – it’s already 4 months behind schedule – and delivering the expected benefits? If this is being considered a “technology project” it will almost certainly fail. If it is really an “IT-enabled change programme”, it will likely cost much more and still be challenged. To extract just a few points from Thomas’s blog:

  • “History tells us that the greatest odds for success with SAP ERP are at organizations that run lean, disciplined shops where change doesn’t have to involve translators or global resolutions.” He then goes on to quote from the UN draft report (released in an article by Fox News – not my usual source of information!) on the progress and scope of the project: “A substantial number of its administrative processes are largely based on practices from the 1940s and 1950s and supported in many cases by technology from the 1980s and 1990s…. There are at least 1,400 [non-integrated] information systems currently in the United Nations Secretariat but in many cases they are used to support or track paper-based processes. Very often, documents are printed from these systems, signed, manually, routed, photocopied and filed with associated costs in time and money. Furthermore, paper documents are usually the source of trusted information, casting doubt on the reliability and acceptance of data existing in electronic systems. The result is that we often have several versions of ‘the truth.'”
  • He acknowledges that “The implementation team…is well aware of the challenges.” Again, from the report: “[The project] is not just about implementing a new system; it is about implementing new and better ways of working together. To meet this challenge, [the project] must improve staff attitudes and skills, align processes, policies, and organizational structures with known leading practices and standards, and deploy a new global information management platform.”

It is encouraging that the implementation team does recognize that this is indeed not a technology project, but an “IT-enabled change programme”. However, the report also say:”…based on the process analysis and requirements review done to date and assuming the organization’s ability to adapt, no customizations to the core SAP code have been identified.” Given the nature of the UN, this would seem to be the mother of all assumptions. The danger here is that while starting with this understanding, the challenges will be so daunting that the “programme” will be scaled back over time to a “technology project” with significant and expensive customization, and erosion of anticipated benefits.

As Thomas concludes: “…if there is one thing that will surely doom the project—because rest assured that the software will eventually run, whether it’s by 2013 or beyond—it will be the ill-equipped users tasked with actually changing the day-to-day of their jobs to fit the strict parameters of this foreign software.”

But, does it have to end this way? Here are my thoughts on what the UN should do to improve their chances of success:

  1. Maintain active executive sponsorship – cascade sponsorship across and down through the organization.
  2. Clearly define the desired outcomes – both end outcomes and intermediate outcomes. Use some form of benefits mapping approach to do this (for more about this look at  Get With the Programme!). Develop relevant metrics – both lead and lag metrics and consolidate them in a benefits register.
  3. Assign clear accountability for all the outcomes – with consequences – align the reward system.
  4. Develop a realistic plan – schedule enough time – break it down into “do-able chunks” with clear outcomes from each.
  5. Recognize the full depth and breadth of the change – specifically cultural and behavioural change. Manage the process of change. Have a two-way communication plan – cascade it across and down to all stakeholders. Listen to the people who have to do the work – be flexible where appropriate. For more on managing change, look at Managing Change – The Key to Delivering Value.
  6. Invest in training – cascade the training using a train the trainer approach.
  7. Measure performance against the metrics – both lead and lag. Understand and act quickly and decisively on deviations.
  8. Be prepared and willing to change course – both the outcomes and the journey.
  9. Stay the course – but know when to fold.
  10. Plan for more change.

I am sure they are doing some of this today, but certainly not all, and likely not enough – if they are to avoid a costly and avoid highly visible failure, and realize real value from this significant investment they would do well to do more!