1. Chapter 12: Project Management and Strategic Planning
Projects that rely on information systems need skilled oversight, and poor project management is often the reason new information systems go awry. The IS strategic plan is a roadmap that clarifies how information systems contribute to the company’s mission and strategy for the future, and what needs to be done to protect the organization’s assets and ensure its success.
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2. Learning objectives Project definition Project management processes
Project management software
Success and failure
IS strategic planning
Human element
The material in this chapter will enable you to:
Define a project, and explain how time, cost, and scope affect it.
Describe the five processes of project management.
Explain how project management software helps managers plan, track, and manage projects.
Identify the main factors that cause projects to succeed or fail.
Explain the importance of strategic planning for information systems, and provide examples.
6. Explain how the human element affects strategic planning.
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3. Electronic medical records
$3 million project fell behind
Some physicians did not support
Many projects struggle because of project management
The largest privately owned medical clinic in Georgia undertook a project to implement electronic medical records (EMR). The CEO was solidly behind the project, seeing it as an important strategic initiative that would improve patient care and generate significant cost savings. But the $3 million effort dragged on, falling further and further behind. Although primary care physicians embraced the new work flow that required them to key in patient information rather than write it by hand, others balked. Endocrinologists, cardiologists, and most top specialists found the system aggravating and unsuitable for their work, but their buy-in was essential for the project’s success. Managing the project was more difficult than the CIO imagined.
Although this initiative eventually limped to a successful conclusion, EMR projects are notoriously prone to delays or outright failure, despite generous government subsidies, escalating legal requirements to digitize records, and the promise EMRs hold for improving care and saving dollars. Many projects of all kinds that rely on information systems struggle because of sloppy, ineffective project management.
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4. Projects vs. processes Projects Processes Temporary
Own budgets and timelines
Unique
Uncertain
Repeated
Efficient and cost effective
Streamlined and predictable
A project is a temporary activity that is launched for a specific purpose, to carry out a particular objective. Projects are temporary, with their own budgets, timelines, and sponsor. In contrast, a business process is a series of events designed to deliver a product or service that is repeated over and over. Projects are unique, but processes are recurring.
Projects are one of a kind, and they involve uncertainty because people are doing things that are new to them, so their predictions about how long tasks will take may be well off the mark. In contrast, a process should be tweaked so that the underlying activities are streamlined, efficient, predictable, and cost effective.
Project management skills are essential for projects incorporating information systems. But many activities in IT are business processes that repeat, and they should be made as streamlined, routine, and as cost effective as possible.
Update Figure
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5. Triple constraint
Every project is constrained by three fundamental forces: time, cost, and scope. These three are interrelated, and if one changes, the others are affected. Often one of the constraints is fixed for a particular project, so the other two forces must be adjusted if change is needed. For a project proposal requesting $150,000, a manager might say $100,000 is the limit, not a penny more—thus fixing the costs. The project’s scope can be reduced instead, the time could be lengthened, or both. In some situations, the time constraint is critical.
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6. Project management processes
Initiating  Monitoring
Planning  Closing
Executing
Project management is a systematic approach to project planning, organizing, and managing resources, resulting in a project that successfully meets its objectives. It requires knowledge and skills in many areas, and a clear understanding of the processes that underlie a successful project. Every project has five underlying processes that require management: initiating, planning, executing, monitoring and controlling, and closing.
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7. Initiating Ground work Project charter Kickoff meeting
The initiating processes lay the groundwork for the project, by clarifying the value it will bring to the organization, setting its objectives, and estimating the project’s length, scope, and cost.
A key document that authorizes the project is the project charter. The charter shows that the project has the commitment and support of senior management, an essential element for success. It should also include a clear statement of objectives, estimated start and end dates, the names of the relevant people and their roles, a tentative budget, criteria for success, and any other pertinent information to get the project off to a good start.
Another initiating process is the kickoff meeting, where the stakeholders meet one another, sometimes for the first and only time. Led by the project manager, the team reviews the charter and discusses next steps.
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8. Planning Project management plan Deliverables Work breakdown structure
Gantt chart
The planning processes should start very early with the overarching project management plan. This will be the road map and guide for executing the project, and it describes the components needed to ensure success. The plan will include an organizational chart, a detailed description of the work to be performed, information about the schedule, details about meetings and reviews, success metrics, and notations about any information systems or project monitoring tools that will be used. It should also identify the deliverables, which are the products, documents, or services that will be delivered to the sponsor during the course of the project. The project management plan touches on several areas that affect all projects, and for larger ones, some of the areas need sub-plans of their own.
The project management plan will also include strategies for managing time, quality, human resources, communications, cost, risk, and overall integration. Several documents are especially critical to the planning process, such as the scope statement, which clarifies the scope and provides a work breakdown structure (WBS). This is an orderly listing of actual tasks that the project team must complete to produce the project’s deliverables. Another is the Gantt chart, which lists the tasks on the WBS along with each task’s projected start and finish dates in graphical format.
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9. Executing Coordinating efforts
Executing processes include all the coordinating efforts that ensure the tasks on the WBS are carried out properly. For the project manager, tasks to execute include communicating with stakeholders, allocating work assignments, negotiating contracts, coaching team members, holding meetings, writing updates, doing presentations for the board, conducting research, and much more. The best project managers, however, spend a little more time on the other processes—especially planning—and a little less on executing.
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10. Monitoring Track progress Predecessors Critical path
Monitoring and controlling processes track progress from start to finish, pinpointing any deviations from the plan. The project manager pays close attention to reports and dashboards that might show early warning signs that some tasks have fallen behind.
Most tasks on the WBS have predecessors, which are the other tasks that must be completed before the particular task can begin. The critical path is the longest path through the project, and it identifies those tasks that can’t be delayed without affecting the finish date. Monitoring tasks that fall along the critical path is especially important.
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11. Closing End in orderly way Document lessons learned
Closing processes will formally end the project in an orderly way. The sponsor may need to sign off that all deliverables have been received and accepted, and the team members may be reassigned to their regular jobs. Usually the project manager holds a final meeting with the team to celebrate (or mourn).
The closing phase should also include a process that documents the lessons learned from the project, so the experience can benefit other project teams and add to the organization’s knowledge base. Unfortunately, many organizations neglect the lessons-learned component of closing processes. Reluctance to document lessons learned is especially acute for failed projects, where people don’t want to admit mistakes or risk blame. Nevertheless, a high-performing organization must work out incentives to encourage team members to share what they learned about project management.
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12. Role of project manager
The project manager (PM) needs leadership skills, excellent communication abilities, and strong team building skills. Although technical competence in the task at hand is valuable, “people” skills are equally so. The PM will motivate the team members and rely on their capabilities and drive to carry out the project. This person must be an attentive listener to hear the views of all the stakeholders, and also an effective speaker to present the project’s status to sponsors and defend resource needs. The job is demanding, and project success can depend so heavily on the PM’s skills which is why many organizations require professional certification, especially for those charged with managing large projects. The Project Management Institute (PMI) offers programs to certify project managers who can demonstrate their qualifications and agree to PMI’s code of professional conduct and ethics.
Another knowledge area project managers must master is change management, which refers to the process by which employees in an organization make the transition from the existing work processes to the new ones. Much change accompanies the introduction of new information systems, particularly when some processes are drastically revised or eliminated through business process management efforts.
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13. Project management software
Managing time
Managing people and resources
Managing costs
Project managers enjoy a broad range of tools that can help manage and track a project. Project management software provides extensive tools to help the PM manage time. The software automatically adjusts start and end dates as the PM creates the work breakdown structure. The PM can also use the project plan as the baseline schedule. Once the project starts, the PM can enter actual completion dates for each task, and the software can display two bars for each task, one for the baseline and one for the actual progress.
Another useful feature in project management software is the ability to assign people to tasks and then track their workloads and duties across the project. The PM can enter the people who will be working on the tasks, along with their working calendars and planned vacations. Team members can each be assigned to the appropriate tasks in the work breakdown structure, and reports will show the level of effort required of each person each day. The reports showing everyone’s schedule are especially useful because many projects include team members who work in other departments or projects, and their skills have to be shared.
Salaries, consulting fees, equipment, travel, rentals, and other expenses can all be estimated up front with project management software and then tracked against the baseline as the project progresses. The software calculates the baseline costs for the project and provides reports on variances as the project proceeds.
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14. Why do projects fail? Lack of executive support
Lack of stakeholder involvement
Unclear requirements
Scope creep
Poor communications
Escalation of commitment
Several critical factors contribute to failure:
● Lack of executive support
● Lack of stakeholder involvement
● Unclear requirements
● Technology problems
● Scope creep and excessive customization
● Unclear roles and responsibilities
● Unrealistic time frames
● Poor communications
● Poor change management
Although technical problems do contribute to failures and delays, most fail factors have more to do with the way projects are managed, monitored, communicated, and supported by senior executives. Some spectacular failures happen because of the escalation of commitment phenomenon. People are loathe to pull the plug on a project in which huge sums and organizational resources have already been invested. Instead of weighing the value of further investment, they forget that sunk costs are bygones and should not guide future decision making.
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15. Success factors
The success factors are almost the mirror image of those that contribute to failure. In the category called “People factors,” executive support tops the list, just as lack of that support does for failed projects.
There is a need for clarity at the very start of the project, at the point when stakeholders, the project manager, team members, and sponsor all must agree on the project’s objectives, success criteria, scope, and other details. The project charter is an effective tool to achieve this clarity and ensure everyone is on the same page.
Project managers need to be willing to make unpopular decisions that will dismay the sponsor or clients. The PM has to clearly communicate the time, cost, and scope constraints as the project unfolds. Another factor that should not be underestimated is the need for end-user training and hand-holding after launch.
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16. Strategic planning for IS
Vision, principles, and policies
Project portfolio management
Disaster recovery
Because information systems are so central to success and strategic competitiveness, organizations create an IT strategic plan to provide a roadmap that charts the course. This roadmap should be aligned with the strategy the company establishes. Whether that strategy is low cost leadership, product differentiation, or something else, the strategy plan for information systems should be closely aligned and used to guide decision making. While the CIO leads the effort, stakeholders from across the organization also participate. Some of the major areas the plan covers are:
● Vision, principles, and policies
● Project portfolio management
● Disaster recovery and business continuity
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17. Vision, principles, and policies
Funding models
Acceptable-use and security policies
Enterprise architecture
The organization’s vision, mission, and culture determine the principles that guide how IT is managed and used, and how resources are allocated. For example, a risk-averse financial company will lean toward strategies that protect assets and ensure compliance with regulations. A startup might stress innovation, establishing principles that promote individual creativity.
The vision, and the principles that drive it, are translated into policies and procedures that reach down into business processes and workplace culture. The organization’s guiding principles also influence how it allocates IT. The organization’s principles also guide the acceptable-use policy, which lays out the rules about what employees can do with IT resources, and what they cannot do. Policies also reinforce legal requirements, such as prohibitions against unauthorized copying, copyright infringement, or exporting encryption software. Harassment, fraudulent use, and any attempts to disrupt information systems or circumvent authentication are also covered. Acceptable-use policies usually reinforce the organization’s security and confidentiality requirements. Acceptable-use policies are expanding to cover how employees use information and communications technologies (ICT) outside work as well.
The enterprise architecture is the organization’s overarching ICT environment, and the plan for this architecture should address its current and target state. As new systems are added and old ones retired, the components of the architecture continue to change. Without a strategic plan to guide the architectural decisions, changes will be haphazard.
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18. Project portfolio management
The strategic plan should outline how the organization will guide investments in new IT-related projects, especially to show how they will support business goals. Project portfolio management is a continuous process of selecting which projects to pursue and then managing the whole portfolio.
The organization must decide on selection criteria and a strategy to determine which projects will make the best contribution, and which are worthy of investment and staff time. One important criterion is whether a project will contribute to competitive strategy and distinguish the company from rivals. Return on investment is another important criterion, one that may not be easy to estimate. Savings can be elusive, too. Compliance and risk reduction are also important drivers for projects.
By some estimates, Fortune 500 companies sink well over half their strategic initiatives into projects. Many companies have established a program management office (PMO) that oversees all the projects going on throughout the organization and provides project management training, software, and support. With the organization’s goals in mind, the PMO can make the tough decisions about how scarce resources are assigned and which projects will take precedence. To track progress on all the projects, the PMO collects data from each one and aggregates it, building a larger picture of the overall health of the organization’s project portfolio. Summary charts show how well projects are doing in terms of cost, schedule, or other metrics.
Deciding which projects to pursue
Managing the portfolio
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19. Disaster recovery and business continuity
Disaster recovery refers to all the procedures and documentation the organization puts into place to prepare for a disaster and recover the technical infrastructure. One study shows that as many as 60% of U.S. enterprises have not developed adequate disaster recovery plans, and far fewer test their plans routinely.
Recovery from disaster is not just about bringing the systems back online, it also means ensuring business continuity. Faced with many different kinds of disasters, the organization must develop plans for maintaining its business operations to avoid a devastating revenue loss and damaged reputation. Disaster recovery and business continuity planning start with a business impact analysis, which identifies the most critical and time-sensitive information systems, explains who will be in charge, how people will communicate, and how the firm will determine the severity of the disaster. Other features of the analysis include data backup schedules, offsite storage locations for backup media, recovery sites where the data can be restored, and procedures for restarting the systems. Creating a plan that gathers dust on a shelf is not an effective approach. The plan must be tested and then revised when flaws surface.
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20. Human element
Every strategic planning effort calls for human judgment. Making predictions about events that affect information systems planning is a considerable challenge. Although hard data and business intelligence can inform the plan and keep it grounded in reality, human beings are remarkably fallible. One reason for such mistakes is that humans show certain biases that can cloud how they interpret data and predict the future.
A cognitive bias is a common human tendency to make systematic mistakes when processing information or making judgments. People show confirmation bias by choosing information to examine that supports the view they already hold and ignoring data that might refute their hypothesis. Another bias is overconfidence in the accuracy of our own estimates. Not only do people underestimate how long tasks like this will take, but they also tend to be quite confident in their mistaken estimates. People often rely too heavily on one piece of information to adjust their estimates, even if it is irrelevant. The phenomenon is called anchoring.
The availability bias, which is the tendency for people to judge the likelihood of events based on how readily they come to mind, can also distort strategic planning. This bias affects how people develop disaster recovery plans, and especially what disasters they judge most likely. The hindsight bias refers to the human tendency to think an unusual event was predictable, once they know it actually happened.
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21. Summary Project definition Project management processes
Project management software
Success and failure
IS strategic planning
Human element
A project is a temporary endeavor with a unique purpose, primary customer or sponsor, and stakeholders. Projects differ from processes, which are repeated activities. All projects are subject to the triple constraints of cost, time, and scope.
Project management has five major processes: initiating, planning, executing, monitoring and controlling, and closing.
Project management software provides tools to help manage all aspects of a project and track its progress.
Primary reasons that projects fail include poor project management, lack of executive support, lack of stakeholder involvement, unclear requirements, and technology problems. The opposites of these, such as strong executive support and user involvement, contribute to success.
ICT is central to an organization’s success, so strategic planning is needed to ensure it continues to align with and support the organization’s vision, mission, and goals.
6. The human element plays out in strategic planning for information systems because cognitive biases systematically affect the way people process data and make predictions.
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22. Gartner case Leading research and advisory company Hype cycle
As the world’s leading research and advisory company on all matters relating to information technology, Gartner, Inc. attempts to see far into what is often a hazy future. Its 1,200 analysts and consultants rely on in-depth research, surveys, interviews, and countless analytical studies to examine every aspect of ICT.
Gartner analysts are in contact with 60,000 clients from 10,000 organizations worldwide, so they gather information from large and small corporations in every industry, government agencies, and nonprofits as well. This breadth gives them insights into patterns and trends that others do not have.
One of Gartner’s most useful planning tools is the legendary “hype cycle,” which tracks the evolution of technologies or IT-related business trends. A cycle begins with a technology trigger, often a disruptive innovation or a start-up company that gains attention. The innovation’s popularity rises quickly through the “Peak of Inflated Expectations.” But then it promptly begins falling into the “Trough of Disillusionment,” as organizations learn the pitfalls and real-world challenges. If it survives, the innovation starts coming out on the other side and eventually reaches the “Plateau of Productivity,” becoming a standard technology or business practice that makes solid contributions. The hype cycle researchers also estimate the time period for each prediction. Strategic planning is fraught with pitfalls, but companies such as Gartner offer a window into the future that can help organizations move in the right directions.
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23. JetBlue and WestJet case
Did not warn customers
Did not reduce volume
Migration glitches
Long waits
Communicated with customers
Backup site and temporary agents
High marks from observers
Two discount airlines, JetBlue and WestJet, both chose to replace their aging reservation systems. The differences between these implementations offer some important lessons.
WestJet, Canada’s second-largest airline, went first. Company executives wisely decided to make the cutover during the winter, when passenger count was lower, but they didn’t try to lower the volume further by limiting the number of tickets sold. They also decided against warning passengers that a change was coming until the go-live date. WestJet had to transition 840,000 customer accounts to the new system for passengers who had already purchased tickets. The migration suffered from glitches and WestJet’s website crashed. Customers suffered long waits and angry bloggers posted their complaints.
JetBlue knew it could avoid the website crash by bringing up a backup site. They also emphasized communications, by alerting customers and other stakeholders weeks ahead and using the JetBlue blog to explain how they were preparing for the software implementation. JetBlue wanted to keep the number of passengers low when the cutover occurred, so it pre-canceled 56 flights and restricted ticket sales on the remainder. To make sure customers didn’t have to wait in long phone queues, it hired 500 temporary reservation agents and kept them on board for two months. Although glitches occurred and not all kiosks immediately functioned properly, observers gave JetBlue high marks.
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24. Chapter