A Portfolio Approach to IT Projects Chapter 10

Project Risk Consequences of Risk: –Failure to obtain all, or any, of the anticipated benefits because of implementation difficulties. –Higher than expected implementation costs. –Longer than expected implementation time. –Resulting systems whose technical performance is significantly below estimate. –System incompatibility with selected hardware and software.

Project Dimensions Influencing Inherent Implementation Risk Three important project dimensions influence inherent implementation risk: Project size Experience with the Technology Project structure

Project Categories and Degree of Risk Low risk (very susceptible to mismanagement) Low risk Very low risk (very susceptible to mismanagement) Very low risk Very high riskMedium risk High riskMedium-low risk Low StructureHigh Structure Large Project Small Project Large Project Small Project Low company- relative technology High company- relative technology

Project Examples by Implementation Risk Categories Spread support for budgeting Manufacturing inventory control On-line graphic support for advertising copy Expert system bond trading Low Structure High Structure Low company- relative technology High company- relative technology

Assessing Risk of Individual Projects Managers should ask themselves: –Are the benefits enough to offset the risk? –Can the affected parts of the organization survive if the project fails? –Have the planners considered appropriate alternatives?

Assessing Risk of Individual Projects Size Risk Assessment Risk Factor Weight 1.Total development work-hours for system 100 to 3,000 3,000 to 15,000 15,000 to 30,000 More than 30,000 2.Estimated project implementation time 12 months or less 13 months to 24 months More than 24 months 3.Number of departments involved with system One Two Three or more Low Medium High Low Medium High Low Medium High

Structure Risk Assessment Risk Factor Weight 1.If replacement system is proposed, what % of existing functions are replaced on a one-to-one basis? 0% to 25% 25% to 50% 50% to 100% 2.What is the severity of user-department procedural changes caused by the proposed system? Low Medium High 3.What is the degree of needed user-organization structural change to meet requirements of the new system? None Minimal Somewhat Major High Medium Low Medium High

Structure Risk Assessment - Contd. Risk Factor Weight 4.What is the general attitude of the user? Poor; against IT solution Fair; sometimes reluctant Good; understands value of IT solution 5.How committed is upper-level user management to the system? Somewhat reluctant, or unknown Adequate Extremely enthusiastic 6.Has a joint IT-user team been established? No Part-time user representative appointed Full-time user representative appointed High Medium High Medium Low High Low

Technology Risk Assessment Risk Factor Weight 1.Which of the hardware is new to the company? None CPU Peripheral and / or additional storage Terminals Mini or Macro 2.Is the system software (non operating system) new to IT project team? No Programming language Database Data communications Other (please specify) 3.How knowledgeable is user in are of IT? First exposure Previous exposure but limited knowledge High degree of capability High Medium Low

Technology Risk Assessment - Contd. Risk Factor Weight 4.How knowledgeable is user representative in proposed application area? Limited Understands concept but has no experience Has been involved in prior implementation efforts 5.How knowledgeable is IT team in proposed application area? Limited Understands concept but has no experience Has been involved in prior implementation efforts High Medium Low High Medium Low

Portfolio Risk Portfolio Risk Focus FactorLowHigh Stability of IT development group.HighLow Perceived quality of IT development group by insiders.HighLow IT critical to delivery of current corporate services.NoYes IT important decision support aid.NoYes Experienced IT systems development group.YesNo Major IT fiascoes in last two years.NoYes New IT management team.NoYes IT perceived critical to delivery of future corporate services. NoYes IT perceived critical to future decision support aids. Company perceived as backward in use of IT.NoYes

Project Management: A Contingency Approach Management Tools: –External integration tools –Internal integration tools –Formal planning tools –Formal results-control Results controls have particularly effective in the following settings. –Clear knowledge in advance of the desired results –The desired results can be controlled –Results can be measured effectively.

Tools of Project Management Integration Tools, ExternalIntegration Tools, Internal Selection of user as project manager. User steering committee (which meets frequently). User-managed change control process. Distribution of project team information to key users. Selection of users as team members. User approval process for system specifications. Prototyping with users. Progress reports. User involvement / responsibility in other key decisions and actions. Selection of experienced IT professional to lead team. Team meetings. Distribution within team of information on key design decisions. Technical status reviews / inspections. Human resources techniques to maintain low turnover of team members. Selection of high percentage of team members with significant previous work relationships. Participation of team members in goal setting and deadline establishment. Obtaining outside technical assistance.

Tools of Project Management – contd. Formal Planning ToolsFormal Control Tools Project management software PERT, CPM Milestone selection. Systems specification. Project approval processes. Post project audit procedures. Status – versus – plan reports. Change control disciplines and systems. Milestone review meetings. Analysis of deviations from plan.

Influences on Tool Selection High – Structure – Low – Technology projects. High – Structure – High – Technology projects. Low – Structure – Low – Technology projects. Low – Structure – High – Technology projects.

Relative Contribution of Tools to Ensuring Project Success by Project Type Projec t Type Project Description External Integration Internal Integration Formal Planning Formal Results Control IHigh structure – Low technology, large LowMediumHigh II High structure – Low technology, small Low MediumHigh III High structure – Low technology, large LowHighMedium IV High structure – Low technology, small LowHighLow

Relative Contribution of Tools to Ensuring Project Success by Project Type – Contd. Project Type Project Description External Integration Internal Integration Formal Planning Formal Results Control VLow Structure – Low technology, large HighMediumHigh VI Low Structure – Low technology, small HighLowMediumHigh VII Low structure – High technology, large High Low+ VIII Low structure – High technology, small High Low

Emergence of Adaptive Project Management Methods Phases in Software Development Life Cycles –Analysis and Design –Construction –Implementation –Operation and Maintenance

Adaptive Methodology Basic Characteristics: –Iterative –Rely on fast cycles and require frequent delivery (incremental) –Customer feedback –Skilled project staff capable of learning and making midcourse adjustments in the middle of deployment. –Emphasize on “buying information” about outcomes as a legitimate expenditure rather than as an investment with predictable outcomes.

A Minimalist Approach to Process Formalization Flow Completeness Visibility