Delivering Technology Projects On Time, On Budget, and On Value
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Upgrading capabilities and re-engineering to align capabilities to user needs are the top reasons manufacturers give for considering an information technology upgrade or implementing new IT, according to an Aberdeen Group research report earlier this year.
Information technology is a central key to successful business transformation; however, a McKinsey & Company study of 5,400 large-scale IT projects (initial budgets greater than $15 million) found that IT project management keeps many an executive up at night. According to McKinsey, large IT projects run on average 45 percent over budget and 7 percent over deadline while delivering 56 percent less value than originally predicted.
Manufacturing-related technology projects may be smaller in dollar and scope, but they can cause many of the same issues that derail larger IT projects. There are several steps manufacturers can take to help ensure successful implementation of an IT project, including:
- Having a clear business justification and value
- Planning for development and implementation
- Avoiding common pitfalls
Business Justification & Value
Adopting new technology simply to be cutting edge is not a reason to upgrade; neither is replacing a legacy system simply because it’s legacy. The first step toward delivering a successful project is to clearly define the business rationale for the change and the value that this change will provide.
To replace a system just because it’s old,” said Michael Askin, senior consultant for Mind Over Machines, an IT consulting firm providing data solutions, software application development, and user experience (UX) design, “is normally not a good reason. “However,” he noted, “the older a system or hardware is, and the more critical it is, the more dangerous it gets to continue to operate.” Askin recommends regular evaluation of all systems and tracking the life of systems against risk criteria.
Scalability is an important factor to consider. “If you can no longer scale the technology,” said Askin, and system limitations have you thinking you should “put the brakes on until we stabilize” or “we are not ready for new opportunities or expansion,” that’s a good reason for an IT change. Another similarly good justification for an upgrade is if system limitations require the addition of staff to add volume.
Does the project support the company’s long-term plan, budget, key performance indicators, etc? Without this demonstrated connection, there is limited value to embarking on a project, and it can often lose momentum and executive-level support once those involved realize it may be difficult to justify or sustain it for the long term.
If it has little or no discernible value,” Askin said, “it should be off the table.” Equally important, however, are the consequences of not doing a project, such as the detrimental effect on a business by not implementing compliance tracking.
Doing a feasibility study captures and documents the reasons behind a new project as well as the risks and benefits. Feasibility studies gather such information as:
- Economic viability
- Technical feasibility
- Operational feasibility
- Possible alternatives
- Political feasibility
Outsource, Buy, or Develop In-house?
In-house development and implementation of IT can be less expensive than outsourcing, but the cost of opportunity, bandwidth, roadmap, technology changes, etc, are often good rationale for partnering with an outside organization. “Without the available internal resources, capabilities, and bandwidth,” says Mariela Koenig, research director of the manufacturing practice at Aberdeen Group, “the right solution may be the more expensive one.”
A recent additional factor in the “make versus buy” decision is related to IT security. Koenig explains that hackers can now break into manufacturing machinery, in addition to e-mail, chat, and financial systems. Coupled with the implementation of the cloud among manufacturing organizations, this can result in exposure to issues that a company may not be capable of managing without assistance.
An outsource decision matrix that includes a review of data related to quality, competence, and cost can help clarify the reasoning around this decision.
Strong project oversight keeps a project on track and avoids schedule slips, quality flaws, and budget overruns. A few common bungles are highlighted below.
Poorly defined problem and expectations
Does the team clearly understand and agree on existing problems that need to be solved and the business justification and the goal(s) that come with the new IT implementation? Without clearly making these definitions up front, a small misstep can quickly escalate and eat up valuable time and resources.
All aspects of a project should be validated “with data and facts, not guesses and assumptions,” said Koenig. Project objectives should be documented, easily accessible, and SMART: specific, measurable, aggressive, realistic, and time-sensitive.
Lack of governance
“Change matters,” said Koenig, “and someone needs to be on top of it.” She means it literally. Governance helps ensure a project is executed according to company standards and the project plan. It keeps a project on track and creates accountability through reporting and oversight.
Roles and responsibilities are clearly defined for all involved, and by adhering to the governance structure, a team can better ensure a project meshes with company’s objectives. Aberdeen Group’s research (pictured below) demonstrates that manufacturers believe executive-level commitment and governance play a central role in the success of IT projects.
Not following a systematic approach
“Bite off small chunks,” said Askin, when tackling a project. “Each chunk should have a definitive goal and be as valuable as possible.” Demonstrating value at regular intervals allows for better evaluation of and quicker adjustments to a project that might be going off track.
Using a stepwise approach facilitates better management of the scope, size, and complexity of a project; there are four-, five-, six-, and eight-step iterative frameworks, such as Scrum and Agile, available to manage and drive a project’s momentum. These processes allow for regular and repeated testing, input from users, and adjustments in the short term to avoid a large, uncomfortable discovery at a project’s conclusion.
Unsuccessful projects skip some or all of these steps, because companies are rushed for time or because competition is forcing a quick change.
But manufacturers see a technology implementation “as a marriage that cannot be broken,” said Koenig. To ensure a long and prosperous marriage, a strong partnership must exist between IT, the business units, and the shop floor. Only through this transparent, structured relationship can IT projects be delivered on time, on budget, and with their intended value.