Tuesday, August 14, 2007

Business Engagement and IT Project Failure

CIO.com recently ran an article by the CIO of GE Fanuc regarding "functional engagement" (i.e. "the business" or more commonly "the users") and project failure. Michael Krigsman later posted a more succinct summary on his ZDNet blog. Here's a even shorter version:

  1. Make sure a single business-side has significant capability, responsibility, and authority for project success.
  2. Don't short-circuit important parts of the project
  3. Make that person understands the "laws of IT" and defends them to his peers, subordinates, and superiors
#1 is just plain common sense. #3 amounts to establishing a scape goat for the inevitable failure caused by short-circuiting appropriate systems engineering or architectural activities. Notice that there is neither a definition of "failure" nor a definition of "success." I think it can be inferred that he's defining "failure" as "exceeding project or maintenance budget and/or schedule." Not once does he mention delivering real innovation to the business or even real value - just avoiding causing massive amounts of pain. Consider the following statement:
Enterprise platforms like Siebel, Oracle and SAP are not intended to be heavily customized. When going from a niche, custom application to Siebel, you need a strong functional leader to push back on every “Yeah, but” statement. They must start at zero and make the business justify every customization. Saying “no” to customization is bitter medicine for your business partners. They will make contorted faces and whine ad nauseum. But it is for their own good.
Let's think for a moment. Your customer (internal or external) wants to spend millions of dollars implementing a CRM (or ERP, PLM, etc.) package. Earlier, it went to the trouble of building one from scratch. That probably means it considers CRM to be an extremely important part of its business, and it expects to derive a competitive advantage from having a shiny new system. The best way to be competitive is to copy what everyone else is doing, right? Also, repeatedly receiving "no" as an answer will really make your customer want to take an active role in the implementation, right? Hmmm....somehow I don't think so. Introducing a strong impedance mismatch between the organization and the software it uses is failure. Standing in the way of innovation is failure. Mr. Durbin wants you to fail. There is actually a simple, albeit occasionally painful, solution to this problem: don't buy an off-the-shelf application that neither meets the business's requirements nor can be cost-effectively extended to meet them. First, you have to understand your business processes and requirements. I mean really understand them, not just understand the official process documentation that no one follows. All those winces and "yes buts" are requirements and process details that absolutely must be understood and addressed. Second, you do a trade study. This is a key part of systems engineering. Replacing enterprise systems is expensive, often prohibitively expensive, so do a thorough analysis. Take some of your key users to training sessions and write down every wince and vaguely answered question, because those are all either issues that will stand in the way to delivering value or will require customization. Finally, keep your pen in your pocket. Don't be tempted to write checks, buy licenses, and sign statements-of-work before your really understand the product. Just ignore those promises of discounts if you get a big order in before the end of the quarter. The next quarter isn't that far away, and the end of the fiscal year may even be approaching. The discounts will reappear then. Instead, make sure the vendor really understands the requirements and business process, and structure any contracts in a way that they must be met or the vendor will face significant penalties. It's amazing what comes out of the woodwork when you do this. All of a sudden that 3x cost overrun from the original projection is sitting right there in front of your eyes in the form of a quote, all before you've sunk any real money into the project. The purpose of engaging "the business" in an IT project is not to create a personal shield for all the deficiencies in the system you are deploying. It is to make sure you identify those deficiencies early enough in the project cycle to avoid cost and schedule overruns.

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