By Robert D. Anderson, CPA

An article by Adam Bookman provides an interesting perspective on why about 68% of IT projects fail to deliver the originally desired benefits. He quotes from a study done by the Standish Group that identifies three primary reasons:
1. The initiative was outsourced to IT and not owned by the business
2. The right tool drives success
3. Best Practices represent the best starting place

Looking back over 20 years in the Accounting and Finance role at major US firms and another 14 years consulting with large international companies, these findings agree with my observations. The most successful initiatives have always been where people in the immediate operational area take full ownership, and IT plays a supporting role. Conversely, the worst initiatives have been solely driven by IT with no business buy-in.

In 1987 the power of business ownership on initiatives was driven home to me in a powerful way. I was Controller for a small, privately held manufacturing firm in Minnesota. We needed massive changes to our current business processes. For example, our core business was delivering fundraising items for unique events; we delivered on time, about 57%, and late for the event almost half the time….talk about problems collecting the money!

The entire business leadership team went off for training on what we wanted to do. Then it led to early morning/after-work training classes to teach every employee in the company what the new business process entailed, their specific part of the plan, and, perhaps most importantly, why we were doing it. When you have the President, owner, of the company, Controller, and VP of Manufacturing, among others, up front leading the class, you get people’s attention. I was amazed as we began seeing the business’s benefits before we did anything with the software. It was wonderful to watch the business transform. Of course, once we put the tools in place, it was easier for the people to accomplish, but the tools were secondary to the effort’s success. We achieved over 97% on time within six months and dropped well over 15% from our cost of production.

Having worked as a software consultant now for almost 15 years, I have had the opportunity to see both large international firms and small local operations implement solutions. Universally, the ones driven by business leaders succeed, and the ones driven by IT struggle to meet their objectives.

In the last few years, I have watched a disturbing trend developing in implementation projects. Firms are moving away from implementations driven by business leaders and consultants with business knowledge. Instead, they are being replaced with the low-cost IT consultant who comes in and sets up the system, so it works. But unfortunately, this failure to address the business processes and get business leaders to drive the deployment and own the effort is a guarantee for failure to achieve the desired outcome.

The second item reflects the success of the marketing by the major software companies. The “buy this latest tool” approach has generated significant growth and made several people wealthy. In several animal studies, researchers have found that many animals, from primates to dolphins and birds, can leverage a tool in problem-solving. All too often, we seem to lose sight of the reason we use tools at work…it is to solve business problems! A handy tool can have a negative impact if not applied correctly or used by an untrained person. Think about the wonderful things a carpenter can build with a hammer, screwdriver, drill, and saw. Now think about putting that in the hands of your dentist to use during your next visit. A growing number of firms are doing that very scenario with their approach to software implementation.

The third item is the companion to the second; if I use “best practices,” I have to be successful…these are the best practices used by everyone! When dealing with a company that has very poor internal practices, no process to capture lessons learned and continuous process improvement, and it’s everyone for themselves, may the best hero win approach to business, there is no way the best tool and best business practices will make it past the doorway of the project team room.

It would be best if you did the following:

• First, making where the company is about internal skills.
• Identify what is needed to be successful in this specific business area – remember, not every firm needs to be running spacecraft design projects. The cost of this new process must match the benefits of the process improvement.
• Map a path from today’s capability to tomorrow’s desired ability.
• Execute the path steadily and methodically, evaluating the progress made and updating the path, as needed, based on the reality encountered.

In June 2000, I had the opportunity to begin an engagement in Beijing, China, for a significant international electronic manufacturing firm. During my initial meetings with the executive leadership team, we discussed one of a project manager and. I what they felt the most important activity was for this role today. The response was, “Take the client to Disney World”! After a series of internal meetings across all levels, we determined a path that included new people in the role, extensive project management training classes, and, in the end, the deployment of some tools to help them do the newly defined job of project manager.

In April 2005, I had the opportunity to return and see how the original business change worked out. It was amazing to see the solid professional project management team now deploying its knowledge across other Asia locations, including Japan and India. They grew into a strong organization by consistently applying the principles they learned.

Project Portfolio Management is a journey, not a destination. It will not be achieved by a single “big bang” software implementation but by a steady, measured application of sound principles adapted to your business’s specific needs. A combination of the right internal people and a solid business consultant can put the proper business practices in place, which also leverage appropriate tools to drive change in your business and place your initiatives into the successful column!