To achieve these business objectives, many companies engage in tactical projects… projects that are typically run sporadically within an organization and rarely achieve success or business value. In fact, industry analysts report that 70% of projects executed are not successful. In addition, less than 20% of companies that engage in supply chain initiatives actually achieve ROI. This is astounding given that a recent survey from CIO Insight indicates that 50% of business executives require that new projects deliver faster ROI…. “Houston we have a problem”. How can your project deliver faster ROI if the chance of delivering ROI in the first place is slim?
Our research indicates that the leading cause for such poor project success is related to the ability to implement change within the organization that holds people accountable for results, and tracks ongoing performance measurement. The fact is, many organizations spend most of their time implementing the “solution” rather than focusing on the business processes and organizational change required to deliver results. The bottom line is that proper organizational change and new business processes account for over 70% of the ROI from a successful project, while only 30% is attributed to the implementation of technology alone.
Focusing project efforts around delivering the remaining 70% of project ROI and business benefit is the key. Based on our work with many Fortune 500 companies, we have seen three main themes for achieving project success:
Obtain Executive Buy-in and Maintain Executive Leadership During the Project Life Cycle.
This means that a solid business case should be developed to ensure commitment, not only for project funds and resources, but also for ongoing leadership to help ensure the results can be delivered. In fact, 63% of project management professionals ranked executive buy-in and leadership support to be the number one driver for achieving measurable business value from a project (source: Jeff Berman Group 2006 Project Performance Survey). Along with a feasible implementation plan and setting realistic expectations for achievement, gaining executive leadership and support requires the ability to demonstrate “how” your project will deliver results.
By showing executives how benefits and ROI will be delivered, executives will stay enthused and help toe the line for implementing change. How includes true mapping of project business value drivers by linking financial, process and operational metrics that will be used to track ongoing performance. Linking such drivers to the case for change will help develop a clear picture that is simple to understand and easy to drive. This will ensure the ongoing leadership support needed to achieve project success.
Implement Change by Managing Key Project Stakeholders.
Stakeholders are defined as an individual or group that is affected by or capable of influencing the change process. Such stakeholders may include managers, system users, project steering committees, customers or suppliers. Stakeholders are important because without their buy-in or consensus to the process or organizational change, the change will never happen. For instance, suppose you plan to put in a new inventory planning system, but the new users of the system (e.g. planners) like the way they have been manually planning inventory for the past 20 years. Furthermore, what if the planners do not buy in to the way safety stock is calculated in the new system? These project stakeholders (in this case planners) won’t trust the new system and will inevitably go back to their old way of doing things. Result: the new multi million-dollar planning system will not be used as originally intended…. project ROI will be sacrificed.
The key here is to involve project stakeholders, from the beginning of the project, to obtain buy-in. This can be done through meetings, workshops, etc., and requires a constant feedback and communication mechanism to ensure that stakeholder commitment is achieved during and after the project is implemented. The bottom line is to understand that any change, whether it is organizational, process or technology related, involves people. People are the foundation for delivering the results. People are your project stakeholders.
Implement an Ongoing Performance Management Process.
Ever hear the term “manage what you measure”? Organizations spend a lot of time doing a lot of things, but mainly focus on those things that are measured or reported. Establishing a Performance Management process requires that your project have Key Performance Indicators (KPIs) or operation metrics that are linked to company business objectives, people and the original business case. Business objectives for projects typically include: reducing cost, growing the business or increasing speed and efficiency. By assigning people (Stakeholders) to KPIs and linking KPIs to business objectives, a clear path is made for not only achieving the original project business case goals, but also delivering project ROI to the business. This means that project stakeholders will be held accountable for results. In return, the company should recognize and reward these efforts. Putting in place an ongoing performance tracking mechanism means that the organization is prioritizing projects and activities for the purpose of delivering results (implementation of the “how” from above). In doing so, the organization will benefit by focusing their time managing what is important…projects linked to business objectives.
In conclusion, the three steps above are things that many of us know or may intuitively feel, but never get the chance to implement. In particular, IT projects tend to be very complex thus requiring that most of our time is spent on the “implementation of the solution” rather than focusing on “how” the benefits and ROI will be achieved. Given today’s tight IT budgets and fierce competition within the marketplace, companies can no longer afford not to have their IT project justified or successfully implemented. Don’t be left behind, take the first step of the three step approach.
If you have the time, I’d like you to join me for a free webcast on June 4, when we’ll discuss Maximizing Project Value. You can earn one PDU. Register free at
, president of the Jeff Berman Group, has developed a reputation for success by transforming organizations and managing global projects for Fortune 500 companies such as Gillette, Johnson & Johnson, FMC, CertainTeed, and Cytec. He specializes in helping companies deliver measurable value from project investments by combining expertise in business processes with technology implementations. Mr.Berman is author of the best selling book Maximizing Project Value as well as several white papers, published articles and training books. He holds a B.S. in Industrial Engineering and M.B.A. from Northeastern University. Maximizing Project Value (ISBN: 0-8144-7382-2) can be purchased at your local bookstore or at www.pmi.org or www.jeffbermangroup.com for an autographed copy. Mr. Berman can be reached at firstname.lastname@example.org.