Posts Tagged ‘Project Governance’

Bridging the top management conceptual divide

Posted in Governing Programmes and Projects, Strategic Programmes on October 14th, 2009 by Raymond Young – 3 Comments

Executive Summary

Top management support is crucial for project success, but top managers are not interested in project level concerns. Programme management is the crucial link because programmes deliver the business benefits required to realise strategic goals. web name generator However the project and programme management community will have to learn engage at the strategy level and focus on the achievement of strategic goals. The current approaches are too heavily influenced by project management concepts to be effective in engaging top management.


The need for top management support

IT governance guru John Thorp has advocated for some time the need to manage projects at the programme level in order to realise the desired benefits. I’ve come to the same conclusion from a different angle:

There is now strong evidence that top management support is the most important critical success factor and is not simply one of many factors [i].

If so, then it is very difficult for projects to succeed if top managers do not consider project management to be a matter of direct concern and they don’t [ii].

If projects don’t succeed (in delivering business benefits) then corporate strategies aren’t implemented. Everyone loses. (This almost certainly appears to be the case with one of the best performers in the public sector: the State of Victoria; and it is likely to be the case with the rest of us. It is well known that two thirds of projects deliver no value at all [iii]).

This situation is very dysfunctional with as much as 3% of GDP is being lost because project managers can’t get the attention of top managers.

We can engage top managers through programme management

We believe there is a conceptual chasm between the top management and project management community. They do not have a common language and do not work together to achieve common goals. We have documented our analysis in Bridging the TMS-PM conceptual divide. Our major findings are:

Project management is increasingly being used to implement strategy; an application it was not designed to meet. Projects deliver products that might enable a strategy but they rarely if ever deliver strategies.

Portfolio management is not a solution because the focus is on the selection of projects. If projects cannot deliver a strategy then no matter how well you select projects, it will not result in a strategy being delivered. For strategic goals to be met, it is essential that portfolios are portfolios of programmes not portfolios of projects. This is not how PPM (project portfolio management) is currently practiced.

Programmes are the vital link between strategy and the realisation of strategic goals. We must as John has stated, focus our attention at the programme level. Plan for, select and fund entire programmes (or not). Our point of difference is that we believe mainstream programme management is currently too immature, too inflexible and too influenced by project management to engage the top management audience. Programme managers cannot assume strategy is delegated from on high and only needs to be implemented. The practice of programme management much be enhanced to deal appropriately with much lower levels of certainty than practitioners of strategic planning and programme management have traditionally assumed.

Finally active governance by top managers is essential to go beyond planning to actually realise the desired benefits over time. The future is inherently unpredictable and top level governance is required to steer or navigate around unexpected obstacles. Governance is not how the project management methodologies have portrayed it: to have a steering committee or a project board. Governance is an attitude and requires an active questioning. The 6Q Governance™ framework, an enhancement of HB280 and AS8016, is an excellent guidance that we recommend to all.

But we need to lift our game and learn to contribute to strategy

However, we face an uphill battle overcoming a considerable misdirection of effort being promoted by the project and programme management community. This might seem an arrogant statement but we would ask you to consider how many project managers operate at the level of the board or C-suite? An earlier blog summarised a professional presentation for ISACA that considered board level decision-making. The quotes below are taken from the ‘decision-making’ module of the AICD Company Director’s Course and we believe the last quote may apply particularly to the current thinking in the project and programme management communities. If we are to engage the top managers we need for our success, we need to do it at their level so that both they and we can succeed. The level at which we must engage is strategy and the achievement of strategic goals.

“Decision-making is a process rather than something that occurs in a single point in time”

“The process … begins when we need to do something but we do not know what”

“People in organisations such as managers must pass through stages in mastering greater and greater complexity. This is not a matter of handling more and more information, but learning what information is important – what not to think about – to focus on what is really important” Jaques (1998)

“When a person is out of their depth in terms of the level of complexity they have to handle, they will implement mechanisms to maintain control such as cutting the debate, seeking to silence people … often unconscious behaviours designed to avoid their own lack of understanding”


[i] R. Young and E. Jordan, “Top management support: Mantra or necessity?,” International Journal of Project Management 26, no. 7 (2008): 713 – 725, http://www.sciencedirect.com/science/article/B6V9V-4T8R1VR-1/2/cbb9982c137815f208ac6ca820c3b45f.

[ii] L. Crawford, “Senior management perceptions of project management competence,” International Journal of Project Management 23, no. 1 (2005): 7-16, http://www.sciencedirect.com/science/article/B6V9V-4D636C6-4/2/b6479d1c140991c277782e9cfaff6ffb .

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

Deficiencies with Portfolio Management?

Posted in Governing Programmes and Projects, Practice Areas, Strategic Programmes on September 7th, 2009 by Raymond Young – Be the first to comment

Executive Summary

Having raised the question in a earlier post of why billions of dollars invested in projects were not resulting in the realisation of strategic benefits, this post explores whether project portfolio management has a part to play.

Project portfolio management (PPM) practice may be deficient in two main areas:

  1. PPM not is practiced in a way that supports strategy development.
    1. It is common practice to focus on project risk, a lower order concern, but even then fewer than 33% of organisations report they diversify projects to manage portfolio risk.
    2. PPM is mainly used to manage resource conflicts
    3. Investments in software are therefore not justified in most cases.
  2. PPM focuses decision-making at the wrong level.
    1. For strategy to be implemented and strategic outcomes realised the key is to select the right programme rather than the right project (projects alone rarely deliver the desired strategy).
    2. PPM must support programme management more adequately.

Portfolio Management

this post is an extract from an academic paper prepared for the IT Project Management SIG meeting at the 2009  International Conference for Information Systems

Project portfolio management (PPM) is a well established field, particularly in the US. It has an extensive literature and is supported in industry by an established and growing PPM software market. Portfolio management has its conceptual foundations in portfolio theory applied to the selection of financial investments to reduce risks and increase returns [1]. This theory was applied to the domain of project portfolio management to select IT projects [2] and PPM software vendors market on the basis of being able to reduce risk and increase returns on a portfolio of project investments [3].

However, the question is whether PPM adds any strategic value [4]. Portfolio selection has been justified in the context of selecting new product development projects [5], but it is far less convincing when applied to the implementation of strategy. A significant problem arises because there is a disconnect in the way strategy is developed and way the strategic is planned [6].  Strategy development is fluid and emergent. Strategic planning, especially when following the current approaches to PPM is relatively inflexible and mechanical. Project selection tends to be based on first degree criteria identified through risk management tools [7]. In contrast upper level strategic decisions have traditionally relied on non-linear processes and higher level considerations. As a result relatively few organisations use PPM strategically. Fewer than 33% of organisations report they diversify to reduce portfolio risk [4] and in our experience PPM is never used to inform or implement strategy. PPM is mainly used to manage project resource issues.

The potential of PPM appears to only be justified when other aspects are in place such as top management commitment, agreed benefits measurement and a willingness to deal with project interdependencies and resource constraints  [4]. Some believe that PPM, because it is meant to deal with fairly stable environments, can only be effective if combined with programme management which is meant to deal with more turbulent environments and emergent strategies [7]. We would agree and add that by definition, strategic outcomes can only be achieved when a whole program is undertaken. If strategic outcomes are to be realised, it makes no sense to select individual projects, selection criteria must be at the program level.

The Victorian public service investment frameworks are quite closely aligned to the concepts of project portfolio management because they emphasise selecting the right projects. However some Victorian managers believe the tools and frameworks are simply guidelines with little voluntary application and little influence in practice. This conclusion can be applied more generally because Victoria  is a leader in New Public Management and for many represents best-practice. This discussion goes some way to explaining why PPM concepts have not had more influence or lead to the realisation of strategic benefits. The crucial deficiency seems to the absence of meaningful linkages to programme management.

References

[1]    H. Markowitz, “Portfolio Selection,” The Journal of Finance,  vol. 7, 1952, pp. 77-91.

[2]    F. McFarlan, “Portfolio appraoch to informatiuon systems,” Harvard Business Review, 1981, pp. 142-150.

[3]    CA, “Leading Market Research Firm Finds PPM Software Delivering Over 500 Percent ROI – CA,” 2009.

[4]    B.D. Reyck, Y. Grushka-Cockayne, M. Lockett, S.R. Calderini, M. Moura, and A. Sloper, “The impact of project portfolio management on information technology projects,” International Journal of Project Management,  vol. 23, 2005, pp. 524 – 537.

[5]    A. Jamieson and P.W. Morris, “Moving from corporate strategy to project strategy,” The Wiley Guide to Project, Program, and Portfolio Management,  Hoboken, NJ: John Wiley & Sons, 2007, pp. 34-62.

[6]    H. Mintzberg, “The fall and rise of strategic planning,” Harvard Business Review,  vol. Jan-Feb, 1994.

[7]    M. Thiry and M. Deguire, “Recent developments in project-based organisations,” International Journal of Project Management,  vol. 25, 2007, pp. 649 – 658.

How much governance is enough?

Posted in Governing Programmes and Projects, Practice Areas on August 19th, 2009 by Raymond Young – 1 Comment

Governing IT and project risk

Boards have been looking for credible advice for some time now on how to deal with IT risk [i]. The jury is still out – deliberating how much time should be spent governing IT and IT projects. Research released today may have tipped the balance towards more rather than less [ii].

Evidence gathered over a 10 year period has shown that IT project failures result in a 2% average drop in the share price. The fall is somewhat greater if it is a failure of a new project and less if it is an operating failure with a current system. Investors were shown to be quite well informed with larger falls when the failure was more severe and more again when there has been a history of failures.

So how much time should be spent governing IT projects? Today’s research suggests it is the amount justified to minimise the likelihood of a 2% fall in the share price, with particular focus on new projects and avoiding repeated failures. It is clearly not the minimal amount of time that Deloitte have identified as the practice with many boards, that in their words is “tantamount to negligence” [iii].

Boards approve around 40% of all projects [iv] and the minimum standard must be (a) at the time of funding to ask four of the six key questions recommended by Standards Australia [v] and (b) to address the remaining two questions by having mechanisms in place to monitor performance.

The guidelines (tabled below) are clearly more to do with good governance than rocket science. However, the statistics reported in the table also show that not one of the guidelines is addressed adequately more than 40% of the time[vi]. The best interpretation of these statistics is that less than 0.2% of projects are governed effectively. Surely we can do better.

Key governance criteria

% time effective

(1)   clarify what success looks like

40%

(2)   understand the scale of change required to realise the benefits

40%

(3)   confirm the sponsor is personally motivated to drive through the necessary change and accountable for the business benefits

5-13%

(4)   determine how to measure and reward success.

33-66%

(5)   have a culture to listen and resolve unexpected problems

???

(6)   monitor benefits realisation and intercede as necessary

0 – 13%

Note: The HB280 guidelines are usually a good starting point for most organisations. There will be times when more detailed help might be required and we have developed the 6Q Governance™ toolset to help institutionalise better practice. However, our approach is focused on the transfer of skills/competencies and not dependent on any tools.


[i] 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

[ii] Anandhi Bharadwaj, Mark Keil, and Magnus Mähring, “Effects of information technology failures on the market value of firms,” The Journal of Strategic Information Systems,  18 (2009), 66 – 79

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

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

[v] R. Young, HB 280-2006 Case Studies – How Boards and Senior Management Have Governed ICT Projects to Succeed (or Fail) (Sydney: Standards Australia,  2006)

[vi] References are available but not included to manage word length. Academic references have been cited over industry sources to increase rigour. Please contact the author for details.

Deficiencies with programme/portfolio management?

Posted in Governing Programmes and Projects, Practice Areas on August 12th, 2009 by Raymond Young – 2 Comments

Executive Summary

Victoria is considered to be one of the international leaders in New Public Management and their approach to project investments was expected to be at the forefront of practice. Our research has shown however, that their key investment frameworks (based on tools developed by the UK’s Office of Government Commerce) do not adequately support their strategic goals.

Our evidence suggests there are major deficiencies with best-practice. We are taking the lead to address this by developing approaches to help boards and top managers to govern projects effectively. However the significant deficiencies with program and portfolio management have yet to be addressed. A call is made for others to contribute.


No adequate tools to govern programmes/portfolios to realise strategic goals

Projects in the public sector

We were recently commissioned by the Victorian Auditor-General’s Office to undertake a study to explore ‘The role of projects within the Victorian Public Sector’. We subsequently extended our study to include New South Wales and found that projects are increasingly important across the whole public sector. Projects now consume around 20-30% of budget[i] and are the main enabler of government policies such as improving health/education and reducing crime/traffic congestion.

The significance of the studies is that they have highlighted a very major flaw in the way projects are typically managed. Victoria is considered to be one of the international leaders in New Public Management and their approach to making project investments was also expected to be at the forefront of practice. It was therefore a revelation to discover their key investment frameworks (based on tools developed by the UK’s Office of Government Commerce) did not adequately support their strategic goals!

The deficiencies can most clearly be seen by considering the impact of the huge project investments over past decade in education and health (estimated to be between $10-20b). The Victorian Department of Education and Early Childhood Development is considered one of the best in Australia, and their effort is undeniable, but their results have not contributed to the government’s 10-year goals. Literacy has generally not improved and numeracy has actually decreased [ii]. Waiting times for health services appear to have been largely static despite almost a billion dollars a year being poured into health related projects. What is going wrong?

Projects in general

Please understand I am not taking the boot to public sector. As a citizen of NSW I am envious of the quality of life the Kennett, Bracks and now Brumby government have delivered for Victorians. A quick comparison with the post-melt-down corporate sector reveals the Victorians govern better than almost anyone in both the public and private sector. Yet their track record with project investments echoes the dysfunctional pattern found all over the world (where half to two-thirds of project investments fail to deliver any benefits at all [iii]). If the ‘best’ cannot get it right, there must be something wrong. Something is missing.

What we have found is that the Victorian investment frameworks are “directed mainly at asset investments”. Their strength is that they select investments based on the benefits to be delivered rather than the cost or the time. Their weakness is that selection is at the project investment level rather than at the program level.

  • Asset investments alone (such as IT, schools, hospital or roads) seldom directly lead to the realisation of strategic goals such as reduced crime, increased literacy, or reduced waiting times.
  • Programs of projects are almost always required (e.g. build school + change bus routes + recruit quality staff + develop and implement quality curriculum + manage parent/community perceptions = increased literacy). It is pointless to fund an individual project unless all the other critical inter-related projects are also funded.
  • Effective governance is also required. Organising and funding whole programs is important, but can easily go off track after approval. Strategy is emergent and needs to respond to the changing environment. Governing is the high-level ‘steering’ of the program through the emergent issues that cannot be planned for (e.g. bushfires, swine flu, global financial crises, etc.)

Deficiencies in best-practice?

Our studies suggest there are major flaws in the way projects are managed. Value is reported to be lost in three major areas [iv]:

  • The traditional emphasis on project management has the potential to increase value by 15% (by avoiding rework and over engineering).
  • The approach taken by the Victorian government is better and may represent current ‘best-practice’ because it has the potential to increase value by 33% (by investing to reduce underutilised infrastructure).
  • The most potential value to be realised is in avoiding duplication of project effort through governance of programmes and portfolios (52%)

This understanding is show schematically below:

Relationship between governance and PPPM

New program / portfolio tools needed?

The solution appears to be more effective governance using programme and portfolio tools as appropriate [v]. e8 Consulting has been focussed on developing governance guides such as 6Q Governance™ to supplement the governance Standards AS8016 and HB280. However, further study has revealed that the disciplines of portfolio and program management to be very immature.

  • The leading programme methodology Managing Successful Projects (MSP) is overly mechanistic and not closely followed by practitioners because it is relatively ill suited to implement strategy [vi].
  • The dominant portfolio approach in practice seems to be based on the selection of projects and more suited to new product development than the implementation of strategy [vii].

These and other early findings [viii] suggest we may have to develop the tools ourselves. We hope it isn’t so and post this blog in the hope that others can comment on our findings and collaborate to find a faster way forward.


[i] We estimate project expenditures to be around $6-8b pa in VIC and $8-12b pa in NSW

[ii] VAGO, Literacy and Numeracy Achievement (Victorian Auditor-General’s Office,  2009)

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

[iv] Doug Watters, “IBM Strategy and Change, survey of Fortune 1000 CIOs.” August 17, 2004

[v] Sergio Pellegrinelli and Cliff Bowman, “Implementing strategy through projects,” Long Range Planning,  27 (1994), 125 – 132

[vi] Sergio Pellegrinelli, David Partington, Chris Hemingway, Zaher Mohdzain, and Mahmood Shah, “The importance of context in programme management: An empirical review of programme practices,” International Journal of Project Management,  25 (2007), 41 – 55

[vii] Michel Thiry and Manon Deguire, “Recent developments in project-based organisations,” International Journal of Project Management,  25 (2007), 649 – 658

[viii] Alan Stretton, “Program Management Diversity – Opportunity or Problem?,” PM World Today,  11 (2009)

Breakthroughs in IT project failure – Governing effectively

Posted in Governing Programmes and Projects on July 27th, 2009 by Raymond Young – Be the first to comment

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].


[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)

Boardroom readiness for business project governance

Posted in Governing Programmes and Projects on July 27th, 2009 by Raymond Young – Be the first to comment

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).


[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

The emerging demand for business project audits

Posted in Governing Programmes and Projects on July 27th, 2009 by Raymond Young – Be the first to comment

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.


[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

Impact of the financial crisis on governance

Posted in Governing Programmes and Projects on July 27th, 2009 by Raymond Young – Be the first to comment

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.

RY picFor 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.


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)

Welcome to the E8 Consulting website

Posted in News and Features on May 17th, 2009 by Terry Rowlings – Comments Off on Welcome to the E8 Consulting website

We are a strategic and business consulting group. New name, but we have been around for a while. We provide services to our clients in four areas:

  • business process management to drive business efficiency, service improvement, and governance, risk management and compliance;
  • enterprise communication and collaboration, leveraging enterprise 2.0 tools, to deliver business efficiency, enable high-performance teams and drive organisational knowledge-capture;
  • project governance that enables organisations to achieve superior returns from projects (ICT and non-ICT); and
  • the management of strategic programmes to realise business benefits.

Our value proposition is to help our customers achieve superior operating performance and above-average returns. We think that’s the heart of it!

Our consulting practice was established in 2000 to provide business process management services. We expanded in 2008 to include three additional practices – communication and collaboration strategy and implementation, governance of projects and management of strategic programmes. We have a number of public and private sector clients across all industries.

So what makes us different? Our people are thought-leaders in their field, with unique experience and skills. Ah, everyone says that. But we use, teach and contribute to the world’s leading standards, frameworks and toolsets. We do, we don’t just talk. register a domain . And we ensure knowledge capture and transfer is embedded in all our projects for the benefit of our clients.

Our goal is to provide exceptional services to enable our clients to be exceptional.