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Uncommon IT Sense - Let's Get the Business Case Right
Given the mission critical role of technology in any enterprise today, the challenge is to immediately be able to do much more, much faster, more efficiently, with less resources, and with confidence and credibility having a more positive impact on enterprise results.
An "admirable" goal, no doubt, but how can well meaning people "make it so" given such an abysmal track record of IT development performance even in much better economic times than we face today?
Research group after research group report that an extraordinarily high percentage of software projects either fail to meet their goals after completion, are delivered over-budget or late, or are simply cancelled outright.
Dynamic Markets Limited August 2007 (CIO)
The Standish Group June 18, 2009 (CIO)
Gartner says half the projects in their study exceeded their initial budget tolerance by 200%. (CIO)
Studies show up to 70% of CRM projects fail. (CIO)
Why do so many business-critical projects, whether done in house or outsourced, fail far too often, take too long, cost too much, and fail to achieve the business value for which they were justified and designed.
Do we think we can improve the track record in today's turbulent times with IT budget slashing and layoffs?
And if 80% of your IT spend is to "keep the lights on" what are you going to cut and how will you get anything new done?
In the first two articles in the Uncommon IT Sense series - Uncommon IT Sense for Turbulent Times and A Better Way to Save Costs and Improve Service! I summarized some of the best thinking on how to do more with less and strengthen your operations in these challenging times. For the balance of this article I want to offer several approaches to improve the "conceptual" aspect of IT projects - the what and why and the business case.
Let's look at the business case and the economic justification for the project in the first place.
Question: How can 44%, or 49%, or 50% of projects come in over budget?
Possible answer #1: Complete incompetence. Hummm ...
Does this story ring true to you?
Champion: Ladies and gentlemen after careful research and analysis to fully implement the solution that exactly meets our needs and deliver on schedule, including the process re-engineering, training and change management requirements, we require an investment of $12 million with a contingency of $2 million for unforeseen adaptations and adjustments.
Boss: What? We allocated $10 million for this effort! No way! Get the $%&# out and come back with a revised project that meets the numbers!
champion (little c intentional): OK
chimp: Ladies and gentlemen after careful research and analysis to fully implement the solution that exactly meets our needs and deliver on schedule, including the process re-engineering, training and change management requirements, we require an investment of $10 million, and we need your immediate approval. We're excited and committed and will deliver on time and on budget!
Boss: Wow! Excellent work! Approved! We're all committed to seeing this through and this project is critical to our success. Well done!
The project comes in 12 months late at $15 million - 50% over-run (excluding the deferrals). What's wrong with this picture?
Possible answer #2: The business case is flawed. (Note to self - all business cases are flawed!)
Far too often the business case is an instrument of "advocacy," and another word for advocacy is "sell." It feels right! It is the right thing to do. It's "strategic!" I (we) want it! And usually we know the "solution" and have made the decision, and just need to find the data to support our conclusion.
Is the "business case" an objective and rigorous analysis of the range of alternatives and a comprehensive evaluation of the costs, the benefits, and the risks? Unfortunately, not many are. C'est domage.
Does it include a realistic and detailed plan to achieve the benefits? Does it have clear metrics to evaluate progress and provide proof of performance? Have all stakeholders taken the time to fully understand the implications, the approach, the investment, risks and outcomes, and signed off on the project?
In all of the history of IT or other projects there are well-meaning people who propose, research, analyze and craft the business case, and other well-meaning people who "approve" the business case. The people are well-intentioned. The process is flawed. Most of the time in most organizations, the process is little more than guesswork.
A little uncommon sense is in order.
Rule #1 No guessing!
In their ground breaking book Let's Get Real or Let's Not Play: Transforming the Buyer/Seller Relationship Mahan Khalsa and Randy Illig share the unique FranklinCovey Sales Performance Group methodology to transform a sales culture with clarity, authenticity, and emotional intelligence. One of their key principles is "no guessing." And the trouble with business cases, the larger the project, the more guessing, and that leads to failure. According to the authors there are four types of "evidence":
The lesson is: Before you spend any money you must develop hard data and evidence of the problem you intend to solve and the benefits you intend to derive. (Period.) Anything less is ... guessing.
Are you taking the above statistics on failures and over-runs to heart in terms of applying to your unique circumstance. Don't. Figure out what your specific experience is. Get the facts that apply to your organization.
To get "hard" evidence ask questions like: How did you come up with that number? Be rigorous. Get to the source. Validate. Verify. Involve your finance folks. (They will sincerely appreciate being involved and engaged very early in the process - please listen slowly - very early!) Best to internalize a well-worn financial mantra - "Show me the money!"
Eliminate "guesstimates " by framing a range. Balance the bias of optimism with "What's the worst that could happen?" Develop alternate scenarios with clearly defined criteria. There is a heightened awareness of and intolerance of "risk" in this environment. Ensure that a mindful "risk assessment" is part of everything you do.
Avoid assumptions. ASSUMING will make an ASS out of U and ME.
If you don't know the range of costs or benefits figure it out with pilot projects before you commit major investments. A very relevant approach for these turbulent times is to move from demo and initial due diligence, to a limited pilot project with test and control groups (all for a known cost). This will enable you to evaluate performance and therefore the possible benefits, impact and value, and then to roll-out in a controlled, incremental way. With more frequent "iterations" - plan, do, evaluate, learn - you will minimize risk and be working with "hard" (real) data for your business. Minimizing risk is good. Getting the real facts is better.
Rule # 2 Tell the truth!
Final word on telling the truth, for project proposers, champions and approvers. "How can I become the kind of person to whom people will speak the truth?" - Susan Scott, author of Fierce Conversations. Be that kind of person.
Rule #3 Get clear!
Know your business' strategic priorities and mission-critical imperatives. Get clear on your organizations' decision criteria. Find out how decisions are really made and what makes or breaks a business case. Get examples of the business cases that have been approved and that did come in on budget and successfully delivered the "deliverables."
Talk to everyone involved, and involve anyone who might be even remotely affected. Get clear on how this will affect what people do, how it will positively impact their everyday work lives. Paint the pictures. Connect the dots. Clarify the vision as in, "What's in it for me and how can I be more effective, or productive, or popular, or more rich and famous?" (Note to self: Everyone matters!)
Be understandable. Park the jargon and translate your tech stuff into simple English, or French or whatever language wherever you are. In difficult economic times there is much less tolerance for tech-talk and eye-glazing technical presentations. Speak business talk with words like ROI, investment, risk, benefits, value and impact. Be brief, be clear.
Be rigorous in establishing the metrics. Identify and elaborate the critical success factors and key performance indicators. How will you measure success? And please, please, please don't create a shopping list of all possible success factors and performance indicators to stack the deck. A shotgun shopping list approach just serves to confirm to your audience that you're not mission-critical or focused on strategic priorities. Less is more. Get a laser-like focus on the specific business performance measures you will impact.
Be rigorous is defining the resources you require and create a comprehensive project charter and plan for execution. Examine all ancillary impacts and where business processes may be affected. Include process re-engineering, change management and communications, and quality assurance. Be realistic and err on the side of caution - under promise and over deliver.
Verify alignment and commitment and get evidence of it with proper sign-offs. Ownership and accountability increases when you don't guess, do tell the truth and get clear on scope, goals, metrics, resources and impact. A powerful question to ask often is - "Do we have agreement?"
Rule #4 Chunk it down
Break larger projects down into “bite-sized” chunks with clearly articulated business results, a “tight” business case and realistic set of deliverables. Smaller and more focused projects are easier to resource, easier to understand, easier to approve, easier to obtain buy-in and commitment, and faster to complete.
Smaller more focused projects reduce risk and provide more opportunities for learning, obtaining and validating "hard" evidence, and generating positive momentum with the on-time, on-budget achievement of deliverables. Quick wins generate enthusiasm and increase credibility and confidence. Create a track record of successful execution and celebrate success often.
Focus on what really matters. Projects that relate to mission-critical priorities will always be self-funding, in terms of delivering a positive and quantifiable financial return greater than the investment (ROI). Focus on the key issues and "hard" evidence and impact for quick wins, quick payback, and a solid return on investment.
If it's true (anecdotally) that 80% of project benefits show up in first 20% of project effort, take the 80% to the bank and get on with the next high-impact project. A leaner and more streamlined approach is appropriate and expected as we navigate through today's turbulent times.
Rule #6 Get real
Do you have the resources to execute with confidence and achieve the results? Do you have the internal capability to deliver? Attracting and retaining talent with expertise in all aspects of information delivery is a daunting challenge, greatly exacerbated by limited budgets and the pressures to reduce costs. You can immediately close the capability gap by partnering with a full-service, information technology services organization that has proven experience.
A partner with direct subject-matter expertise and fully conversant with the latest technology innovations can bring an unbiased expert perspective to make an immediate impact. In addition to providing talent and expertise, you can accelerate the effort and minimize the risk by working on a project basis without a long term commitment or cost.
How can we improve the track record of IT development in today's turbulent times? First get the business case right:
Challenging times call for creative approaches and perhaps a little "uncommon" sense to be ready to respond to the opportunities ahead!
Thank you for your time and interest. I hope this article has provided insight into several key issues and best strategies for these turbulent times.
Many more articles in The CIO Refresher in The CEO Refresher Archives