I was discussing with my current project team the other day what a capable Project Manager (PM) looks like. They said for some of the projects they experienced previously with other PMs, the project would probably have been just as successful, if not more successful, without the PM. Why is this the case? Doesn’t success rise and fall on the shoulders of leadership?

For starters, I don’t like to see myself as a Project Manager. I am a People Manager and cheerleader. My passion doesn’t lie in getting the project to the goal of within schedule and under budget, though that is important. Instead, I hold higher importance on the process of getting the team to a place of ‘I want to take hold of the vision that my PM has given me’.

Before you brush this aside thinking it’s too touchy feely, think again. What’s the point of having all the right tools and methodologies (which I do live by!) but you don’t have a team that is willing to support you in the delivery of the project, because you haven’t provided the support they need in the first place? In my view, support means when someone is struggling, you struggle with them, and when they have a win, you cheer with them.

My role isn’t just about aligning Gantt charts, balancing financials, documenting plans, being a task master, and following PRINCE2. Underlying this, it is about gathering the team, seeing eye to eye, building trust, having the gut feel of when someone needs help and is too afraid to say it, leveling out egos to ensure all are team players, and coming alongside so that it is not a ‘you versus me’ culture, but a ‘what are we doing to make this work together’ culture. In other words, it’s aligning what is in your head to the things of the heart. The things of the heart set the right foundations for a successful project to satisfy the things of the head.

There are good reasons to build the strategic programme management capability in your organisation.

Here are just a few of them:

Programme strategy – Make sure that the purpose, size and structure of the programme is suitable for the outcomes required, and that there is a clear understanding of the organisational drivers.

Programme design – Create the correct programme structures to deliver successfully, and ensure the processes needed to manage the programme are in place.

Programme and project execution –  Ensure that your programme is structured and then managed to deliver on its strategic objectives, rather than only ensuring delivery of tasks.

Systems integration, core system replacement, process improvement, business consolidation, cost reduction – Ensure that the full extent of change in these programs is understood and recognised.  Identify where, why and how to manage them as a programme of work to ensure wider organisational issues are managed.

Control - Ensure that success criteria are established, agreed and measurable. A well defined programme review process will pick up projects before they derail. Good control extends through to programme finalisation to ensure the desired business benefits are achieved.

How often do you hear that in an enterprise? I have worked in a number of businesses and often hear the words from the business such as “IT doesn’t understand what I want” “This system does not do what we asked for” and from IT “We have given the business what they asked for” “Why can’t the business tell us what they want better?”

At best this promotes a divide between the two most important areas of a company, at worst it can cost substantial money to rectify and vastly impact customer satisfaction.

How can you get around this without beating everybody with a big stick? Use business process modelling (BPM) to represent or design processes.

BPM, when applied effectively, enables a smooth transition from the interface with the customer through to the design of systems and methods to support that interface. At the end of the day it is all about the customer and a business should be designed with that in mind.

Business process modelling can take the companies core values, strategy and objectives and distill these into progressively lower levels of process that can be easily understood by business representatives facing the customer, operations personal supporting the business representatives and of course IT providing the systems that support both. All staff can understand how a process works and what the inputs, outputs and interfaces are with that process. An effectively modelled process can enable IT to better understand a business’s requirements and build a more focused system.

Modelling a fair representation of a business process is not always easy but then neither is running the business itself. The last thing you need is for a ‘disconnect’ to exist between key departments. I have found that while often effective models can be built by interviewing key personnel in the business and passing these down to IT in an appropriate language, often a better way is to workshop a process with representatives of business, operational and IT areas. This enables all areas to make their contributions from their point of view but most of all, the group gains a much better understanding of each others objectives and difficulties. The same argument applies to developing models between divergent business departments.

Give it a go. You will be surprised at how effective it can be at breaking down barriers and if you need help, of course give us a call!

I was at a meeting recently where someone began nearly every sentence with the words ‘with respect’.  The topic was fairly contentious, and so I suspected the intent was to diffuse any tension. But after a couple of hours relentless use, even I had to wonder whether it was a habit the user had become unaware of, or whether in fact it was being used to indicate a lack of respect.

In legal practice many years ago, I recall waiting for a matter to be heard by a Supreme Court registrar. Another practitioner, after an altercation with the registrar on a missing document, finally began a new sentence with the words ‘With respect…’ The registrar fixed the practitioner with a steely look, flipped the case file to the associate and said ‘matter dismissed’. While there were grounds for the matter to be dismissed, I’m sure the ‘with respect’ phrase sealed the practitioner’s fate. The sub-text to the registrar was ‘you’re wrong’.

And that’s how it began to sound in the meeting. The sub-text began to play each time the person spoke – ‘you are wrong and I’m going to explain why’.

So a word of warning: be aware of phrases you use frequently, take care in using them, and understand the meaning of them in particular contexts. You may be saying more than you realise.

Components of business process management have been around for a long time in a variety of iterations. Those of you who are ‘longer in the tooth’ like me, will remember things like Clerical Work Improvement Programs, Process Re-engineering, Workouts, Continuous Improvement Programs, Six Sigma, Lean, Business Process Mapping, Business Process Modeling …and the list goes on. A number of these programs are still currently being used and will be for the foreseeable future. What they all have in common is that they are attempting to improve and manage all of, or part of a process,  ie Business Process Management.

What I am trying to say is that BPM is not new, it has been around for decades. What is becoming different is the increasing complexity of businesses, their systems, their markets and their environments. Whereas before, businesses could probably survive on a high level understanding of how they operated, in today’s world it is more important than ever that business leaders and their employees have an appropriate level of understanding of their business processes, interactions and relationships with systems and, most of all, with customers. Gaining that understanding enables business leaders to employ any number of techniques (including some of those above) to improve, repair, remove or even design processes that support their key objectives.

Thankfully consultants and vendors are keeping pace with this rate of change so there is a myriad of solutions available to assist businesses to gain a greater understanding of how they operate.

Something to keep in mind that I have noticed over the years is the assumption that a business process improvement is tied in with a change or development in IT and subsequently increase in short term cost. This is definitely not the case. I have worked on a great number of solutions that involved purely a change in the way things were done by people and produced very successful outcomes. Another hangover from the early days of BPM is that process improvement always results in staff retrenchments. This is also not necessarily the case. Freeing staff from performing non-productive processes enables them to focus on the more profitable activities of the company.

True business process management is about understanding and managing business processes, data, IT systems, people, business objectives, risks, regulation and their relationships with each other.

Previously business process management in whatever guise was optional, now it is essential.

You should be able to look at every process in your company and ask one of two questions:

1. How does this process contribute to my customer’s satisfaction?
2. Or how does this process support those processes that contribute to my customer’s satisfaction?

If these cannot be answered then you would seriously have to question what the process is for. Why pay good money for something that is not supporting your key objective, the customer?

IT projects failure has been an issue almost since the dawn of computing [i] and recent data suggests the failure rate is not only not improving but actually getting worse (Standish 1994-2009). It is clear that the traditional approaches are not improving results despite more than fifty years of intensive effort.

Project governance is emerging as a radically different paradigm to solve the problem. The approach emphasises project success (realisation of business benefits) over project management success (on-time on-budget). It is based on the research which suggests that top management support (TMS) is the most important success factor [ii].

The implications are very significant:

• If TMS is the most important CSF, then much of our current research and practice is misdirected
• A major shift in emphasis may be required:
  • Boards and top managers may have to accept that they personally have the most influence whether a project succeeds or fails
  • Boards, top managers and their advisors may have to accept that the current ‘expert advice’ has less impact on success than previously believed.

To avoid an overly long blog, I’ve attached a presentation below that visually presents much of this research and provides an authoritative overview of project governance. It was originally delivered at the University of Sydney as a topic in INFO6007 Project Management in IT, an elective course in their Masters of IT [iii].

The presentation provides a definition of project governance based on the leading edge [iv] project governance training provided through my consulting practice. The financial implications are also presented but this is more fully developed in another paper [v].

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[i] D.T. Caminer, “And How to Avoid Them,” The Computer Journal,  1 (1958), 11-14

[ii] Raymond Young and Ernest Jordan, “Top management support: Mantra or necessity?,” International Journal of Project Management,  26 (2008), 713 – 725

[iii] It is currently proposed to develop this topic into an additional elective ‘Advanced Project Management’ by incorporating topics in program, portfolio and change management and advanced communication skills. This advanced elective is scheduled to be delivered in January 2010.

[iv] The project governance training delivered in conjunction with Jed Simms of Capability Management has been described by Harvard Professor James McKinney as ‘world-class, 2-3 years ahead of the competition’

[v] R. Young, “What is the ROI for IT Project Governance? Establishing a benchmark.,” in 2006 IT Governance International Conference (Auckland, New Zealand, 2006)

For any investment to deliver the expected benefits, top management have to play their part. They have to govern the investments that have been authorised. Boards have to have ways to hold sponsors accountable for the promised benefits and have ways to intercede effectively whenever the expected benefits turn out to be unrealisable.

My research has shown that Boards and top managers have the most influence whether a project succeeds or fails [i]. However, other research suggests the governance of investments is far from adequate:

Expected benefits are only ever documented 67% of the time (but 27% of the time the benefits are exaggerated to get funding [ii]). Board members openly admit there are times when “we knew we were being lied to but no one was willing to raise the issue” [iii] and major auditing firms have suggested the common practice was “tantamount to negligence [iv]“.

Only 5-23% of boards hold project stakeholders responsible for the promised benefits [v] and fewer than 13% of organisations track the benefits through to realisation [vi]. None of the board members I spoke to said they had a consistent mechanism to terminate projects.

Major cultural change in board practice is required. Are boards ready to govern projects? My answer is yes. My early research has shown:

1. Director education supports the concept of project governance (through the concepts of Strategic Execution and Decision Making, both of which are major modules in the AICD Company Directors Course).
2. Three out of four directors acknowledge that projects seldom deliver the expected benefits.
   1. Their review of the new Australian Standard (AS8016, HB280) was positive because “it provided the right guidance for boards”.
   2. They rated project governance as a medium priority for the board.
3. The main issue identified was a lack of mental bandwidth because of the heavy burden of compliance with new regulation.
4. The solution presented was to keep things simple:
   1. talk about strategy and focus on what success looks like,
   2. talk about the role of the sponsor and the board,
   3. focus on the other HB280 questions:
      1. How much change is required?
      2. How should success be measured?
      3. Is there the culture to surface and resolve unexpected issues?
      4. Are the benefits on track to being realised?

These findings were presented at ISACA’s Oceania CACS conference on ‘Delivering Value’ held in Sydney from 8-10 September 2008 (see below). The research confirmed the trend identified in my earlier presentation ‘The emerging demand for business project audits’ (14 March 2007).

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[i] Raymond Young and Ernest Jordan, “Top management support: Mantra or necessity?,” International Journal of Project Management,  26 (2008), 713 – 725

[ii] Chad Lin, Graham Pervan, and Donald McDermid, “IS/IT Investment Evaluation and Benefits Realization
Issues in Australia,” Journal of Research and Practice in Information Technology,  37 (2005), 235-251

[iii] Standards Australia, HB280 How Boards and Senior Management Have Governed ICT Projects to Succeed (or Fail) (Sydney: Standards Australia,  2006)

[iv] Deloitte, What the Board Needs to Know About IT: Phase II Findings: Maximizing performance through IT strategy (Deloitte LLP,  2007)

[v] J. Thorp, “Unlocking Value – Delivering on the Promise of Information Technology” (Sydney, 2008)

[vi] KPMG, “Global IT Project Management Survey: How committed are you?.” 2005

Boards appear to be genuinely interested in improving their performance [i]. They are also looking for guidance on IT issues but (a) their experience with IT advisers had been disappointing [ii] and (b) ‘best-practice’ had been found to be of little practical utility with no consistent impact on success [iii].

However new governance Standards (ISO38500, AS8016, HB280) are emerging that address board-level concerns and are focused on the realisation of above average returns. Within Australia, because of the large investments in IT, effective governance of projects could lead to 1-3% increases in GDP. It will be a major breakthrough if boards start to follow these guidelines and require business process audits as part of the regular governance process.

The leading indicators of change might be:

• appointment of board members with IT experience,
• business project auditing being offered by major consultancies,
• widespread adoption of the new governance Standards,
• the term ‘business projects’ entering into the common business language
• significant negative press over new project failures.

These suggestions were originally presented at an ISACA professional development session in Sydney on 14  March 2007. The slides can be seen by clicking on the link below.

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[i] R. Leblanc and J. Gillies, Inside the Boardroom: the coming revolution in corporate governance (Toronto: John Wiley and Sons,  2005)

[ii] R.C. Young and E. Jordan, “Lifting the Game: Board views on e-commerce risk,” in IFIP TG8.6 the adoption and diffusion of IT in an environment of critical change, (Sydney: Pearson Publishing Service, 2002), pp. 102-113

[iii] Raymond Young and Ernest Jordan, “Top management support: Mantra or necessity?,” International Journal of Project Management,  26 (2008), 713 – 725

Governance legislation since the Great Crash of 1929 has largely been enacted in response to corporate excess. Arguably, the objective of the legislation has had more to do with reassuring the public than reducing risk.

Most authorities point to the UK Cadbury report (1992) as the source of our modern ideas of corporate governance. The Cadbury report was a reaction to the collapse of BCCI, Polly Peck and Maxwell Communications. Like much of the corporate governance legislation to follow, the resultant Cadbury Code was responding to executive excess.

Australia’s Bosch Report (1995) followed the collapse of Rothwells, Elders, Bond Corporation, Tricontinental, Pyramid and Quintex. The unfettered actions of mavericks such as Laurie Connell, John Eliot, Alan Bond, Christopher Skase are now part of corporate legend.

Governance responses to corporate disasters

Corporate Disaster	Response	Main Details
Maxwell (1991), BCC1 (1991), Polly Peck (1991)	Cadbury (1992)	Directors responsibilities include safeguarding the assets of the company and preventing and detecting fraud and other irregularities
Rothwells (1986), Elders (1986), Bond (1987), Tricontinental (1989), Pyramid Building Society(1990), Quintex (1990) State Bank of VIC (1991), State Bank of SA (1992), AWA (1992)	Bosch (1995) ASIC (1989) CLERP	tough penalties against directors who breach their duties of care, diligence or do not comply with the legislation, especially so in relation to insolvent trading
Zeebrugge Ferry (1987), Kings Cross Fire, Lockerbie air disaster (1988)	Hampel (1998), Turnbull	Directors should have responsibility for all aspects of control and a duty to establish a robust system of risk management
Barings (1995), Allied Irish Bank (2002), NAB (2004)	Basel
HIH (2001), One.Tel (2001), Harris Scarfe (2001), Ansett (2001)	Clerp9
Enron (2001), WorldCom(2001),Tyco (2001), Adelphia (2001), Qwest (2001), Parmalat	Sarbanes-Oxley (2002)
AWB (2004), James Hardie (2004)

Cadbury in the UK, COSO in the US, COCO in Canada, King in South Africa and Bosch in Australia, marked an end to the old boys club. Directors were made firmly accountable for preventing and detecting fraud. The 1992 AWA case in Australia lifted the stakes further in the Commonwealth countries. The ruling established that the law does not differentiate between executive and non-executive directors with all being equally liable.

Sabanes-Oxley represents the most recent knee-jerk reaction to the collapse of Enron, Worldcom, Tyco, and so on. Many feel this legislation is deeply flawed and at least one major Australian organisation has delisted from the US stock exchange rather than comply with unnecessary requirements.

The commonwealth countries have followed a different path with ‘comply or explain’ regimes of corporate governance. The UK’s Combined Code is probably the best example, and represents the maturing of the Cadbury Code following the Hampel, Turnbull and Higgs reviews.

Australia followed a parallel path with the CLERP9 reforms to the Corporations Act (2001) following the collapse of HIH and One-Tel. However, reforms have not been uniform and the resulting regulatory landscape is considered by the Australian Institute of Company Directors (AICD) to be one of the most complex in the world.

There are the ASX guidelines for listed companies, the generic Australian standard AS8000 for all companies, and applied industry guidelines relating issues such as doing business on the internet (security, privacy and spam). There is also competing and sometimes conflicting legislation at both state and federal levels. This includes the Tax Act and related accounting standards, the Trade Practices Act which is prosecuted vigorously by the Australian Competition and Consumer Commission (ACCC), environmental legislation at state and federal levels that is also prosecuted to make an example of any transgressions, the Anti-money Laundering and Counter Terrorism Act and various conflicting state legislations around occupational health and safety, bullying and anti-discrimination, and so on. The most severe jurisdiction is arguably in the ACT where directors can be imprisoned for up to 20 years for industrial manslaughter.

The legislative line is very punitive with directors and officers assumed to be guilty and needing to prove they have taken every reasonable precaution. A culture of compliance is advocated by the AICD as the best defence.

The financial crisis has regulators, governments, and the media focused on economic stimulus. However tough questions will soon be asked about what went wrong. Ineffective governance will be one of the first targets, and it won’t be just the financial sector that faces increased scrutiny[1].

Few doubt that effective governance has value, but to paraphrase Warren Buffet “the tide has gone out, and Sarbanes-Oxley for example, looks like it was swimming naked”. Investor confidence has not increased, management accountability is being called into question and the tens of billions spent by boards for compliance has not stopped or prevented the crisis.

For years, as an academic and as director, I along with many others have been pointing out the flaws of governance only for the sake of compliance.  Most governance prescriptions are a response to corporate excesses and enacted to reassure the public and few prescriptions actually improve performance or reduce risk[2].

Now the tide is out, higher levels of scrutiny must be expected. What will it expose? I believe the corporate governance of major projects will stand out as one of the highest priorities for attention.

Management of large-scale expenditures is a fiduciary duty requiring careful oversight. However a Deloitte survey of boardroom directors revealed oversight of IT projects was either “blind” (29% with inadequate information) or non-existent (16%)[3]. They warned in 2007 that the results were “tantamount to negligence” and the AICD have long reported statistics suggesting the problem is more widespread[4] (Figure 1). My own research suggests that as many as two out of three projects fail to deliver the expected benefits[5]. Increased scrutiny could reveal the real failure rate. However what might be worse in the current financial environment is to have two out of three strategic initiatives fail to increase revenue, enhance customer service or reduce cost and threaten survival.

To survive, thrive and also to minimise the governance backlash, the first step must be to get the right information needed to govern effectively. The board bears the responsibility to set clear guidelines and expectations about the kinds of information they want to see filter up. What benefits are being targeted? [how is this consistent with our strategic priorities?] Do we have the organisational capacity to realise these benefits and what other risks are involved? How will we measure success? Do we have the right person driving the change? Are there any warning signs that the project is going off track? Are the benefits being realised? These questions seem simple but none of the directors I have spoken to had an effective process to terminate failing projects. Benefits are usually quantified (66%), but they are often overstated (27%)[6], change is not always considered (40%)[7], individuals are not held accountable (5-23%) and few organisations track benefits through to realisation (10%)[8]. Organisations do not focus on the true determinants of success.

In the absence of guidance, management has turned to so-called ‘best practice’ and focused on efficiency measures such as on-time and on-budget. Unfortunately on-time on-budget reporting was never the most appropriate focus for governance. It is certainly not enough in this new world. Only effectiveness will count because average or below-average performance will not guarantee survival. Above-average performance gained through acceptable levels of risk is the true objective of governance[9], the standard to which the board must aspire and the standard to which management must be accountable. Governance effort for compliance only, even if it is with a so-called ‘best practice’ framework, is a governance luxury we can no longer afford.

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References

[1] 2009 Corporate Governance Conference: New Risk, Accountability and Leadership Challenges. Toronto 6- 7 May

[2] See related article providing A brief history of corporate governance 15 July 2009

[3] What the Board Needs to Know About IT: Phase II Findings (Deloitte, 2007), http://www.deloitte.com/dtt/article/0,1002,sid=36692&cid=151800,00.html

[4] D. Lovalla and D. Kahneman, “Delusions of success: how optimism undermines executive’s decisions, Harvard Business Review,” Harvard Business Review July (2003): 58

[5] R. Young, “What is the ROI for IT Project Governance? Establishing a benchmark.,” in 2006 IT Governance International Conference (Auckland, New Zealand, 2006)

[6] Chad Lin, Graham Pervan, and Donald McDermid, “IS/IT investment evaluation and benefits realization issues in Australia,” Journal of Research and Practice in Information Technology 37, no. 3 (2005): 235-251

[7] KPMG, “Global IT Project Management Survey: How committed are you?,” 2005, http://www.kpmg.com.au/Portals/0/irmprm-global-it-pm-survey2005.pdf

[8] John Thorp, “Unlocking Value – Delivering on the Promise of Information Technology,” in Delivering Value, 2008, http://www.isaca.org.au/modules.php?op=modload&name=News&file=article&sid=28

[9] F.G. Hilmer, Strictly Boardroom: improving governance to enhance company performance (Melbourne: The Business Library, 1993)