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March 2009 - Posts

Cost vs. Value

Published: March 18 2009, 10:05 AM | 2 Comment(s)
by Steve Romero

  

Are you managing cost or delivering value? Many folks will look at the statement and ask, "What's the difference?"

I just finished a discussion with a colleague on this very subject. They were trying to succinctly characterize the objective of IT project and portfolio management (PPM) in relation to serving their business constituents. The following is the statement they proposed:

"Deliver IT services that business stakeholders value at the lowest possible cost."

I was immediately bothered by the statement because it included the "c-word" - cost. I can't stand the term, even in this down economy when "cutting costs" is practically a universal mantra. I still tell audiences, "I don't care about cost. I care about "value."

Consider two of my favorite descriptions of PPM:

"The goal of Project and Portfolio Management is to ensure an organization's overall portfolio of IT-enabled investments is aligned with and contributing optimal value to the organization's strategic objectives."

"IT's ability to partner with the business to maintain alignment and maximize return from IT investments."

In neither of those two statements is the word "cost" used. Instead, you find the word "value" in the first statement, and the words "maximize return from IT investments", which is another way of saying value.

This is not to say cost is not a consideration. In fact, I can't begin to calculate value or return on investment without an accurate understanding of cost. Cost is a major component of value. But too many organizations focus almost solely on cost, especially in a down economy. Why?

Because few organizations have t he processes and relationships in place to estimate, measure, and determine value. They lack the appropriate IT Governance, and more specifically, the PPM processes to enable the successful valuation of IT investments. In lieu of these processes they fall back on the age-old practice of managing cost. They do their best to set cost-cutting goals, but these are frequently arbitrary targets due to their inability to accurately determine the value of investments.

Enterprises with sound IT Governance and PPM processes are able to appropriately respond to downturns in the economy. They have the mechanisms in place to adjust investment decision-making criteria and measure the potential and actual value of investments. This ability enables these organizations to ensure their constrained resources (including capital investment and expenses) are allocated to the highest value initiatives. Cost is a factor, not the aim.

What is the situation in your company, a focus on cost or attention to value?

Steve Romero, IT Governance Evangelist

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By: Steve Romero
Steve Romero is the IT Governance Evangelist at CA Technologies, Inc. His mission is to help enterprises realize the full potential of their IT investments for strategic and competitive advantage. In this capacity, he acts as a strong advocate for the customer, speaking around the world to users, prospective...
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Project Disaster = Satisfied Customer

Published: March 12 2009, 02:32 PM | no comments
by Steve Romero

 

Do you think the title of this blog posting adds up? Can you think of a project that was a "disaster" but at the end, the customer was satisfied? I think it is possible and a recent trip across the country reminded me this equation is possible.

This past Sunday I was scheduled to fly from Oakland Airport in Northern California to Birmingham, Alabama with a 90-minute layover in Denver, Colorado. I was to speak at the Birmingham PMI Conference Monday morning and then catch an early afternoon flight home, connecting again through Denver.

Things did not go according to plan. I received two notifications from the airline Sunday morning notifying me that my flight from Oakland to Denver was delayed, making the connection to Birmingham impossible. I called the airline and after some checking we determined the only viable alternative would be for me to fly out of San Francisco (instead of Oakland) at midnight. I would take a red-eye to Chicago and land 45 minutes before a flight to Birmingham. The return flights would be the same, save flying from Denver to San Francisco instead of Oakland.

Flying overnight before a Keynote presentation at a PMI conference the following morning is not the most ideal scenario - to say the least. But I didn't want to miss my commitment so I forged ahead. I accepted the new plan.

I am sure you have guessed by now. This also did not go according to plan.

The very first flight out of San Francisco was almost 30 minutes late. I landed in the B-terminal in Chicago and raced to F-terminal for my flight to Birmingham. (For those of you familiar with O'Hare airport, you know this is not a short jaunt.) The airline gate agent was waiting for me and got me on the plane just in time. This was the one flight I hoped would be delayed but it ended up being the only flight that was on-time. It figures.

I landed on-time in Birmingham, claimed my baggage and caught a cab to the venue hotel. I arrived, freshened up and changed (I won't say where) and checked in with the wonderful folks of the PMI Birmingham chapter. They got me some coffee and helped me get ready for my 10:45 keynote.

Just minutes before I spoke, I received an email notice from the airline letting me know my flight out of Birmingham later that afternoon was delayed 2 ½ hours. The good news was that I could join the conference attendees for lunch, but I would miss my Denver connection to San Francisco. I called the airline and they scheduled a late flight from Denver, which I would need to finalize at the airport.

I enjoyed my lunch and arrived at the Birmingham airport hours before the delayed flight was scheduled to depart. I spent the time catching up on email and listening to the endless rants and complaints from some very unhappy travelers. The flight ended up being 3 hours late - the additional delay due to the wrong crew boarding the plane, which resulted in quite a scene as people were boarded, removed, and boarded again after the correct crew showed up.

Upon arriving in Denver I had a new email waiting for me notifying me that my 9:15 flight to San Francisco was delayed 90 minutes and would depart just before 11:00 - arriving well after midnight.

I should pause at this point and describe my demeanor. I have been traveling regularly now for over two years as CA's IT Governance Evangelist. After my first two weeks in this role (and a number of travel-related issues), I made the conscious decision to "go with the flow" in regard to the trials and tribulations of constant air travel. Admittedly, my tolerance was being tested as I walked up the Jetway upon my arrival in Denver. After 24 hours on the road, numerous flight plan changes and the resulting hardships, I was now facing another substantial delay. I would be lucky to get back to my house by 2:00 in the morning (4:00 AM Central time).

Upon entering the terminal I was surprised to be greeted by two airline employees waiting for me. In my two years of travel I have attained top status with this airline and as such I am provided numerous benefits. These two employees were specifically there to greet me, find out if there was anything I needed, and personally work with me to determine the best course of action to get me home. They even carried my bags!

I ended up declining the two presented alternatives (flying to a different airport of flying on a different airline). They apologized profusely and upgraded me to First Class.

After a major change in flight plans that would prevent me from sleeping in a bed the night before a major presentation, after delays on 3 of 4 flights totaling more than 6 hours and causing two more unscheduled plan changes, after arriving home at 2:00 AM in the morning...I was delighted with the service.

Why was I delighted?

 

  • I received constant accurate status updates (12 to be exact) from the airline
  • I received the updates in a timely manner from the airline
  • The airline admitted their problems and issues to me
  • The airline listened to my concerns and desires
  • The airline offered me numerous alternatives
  • The airline let me choose the alternative that worked best for me
  • The airline made the necessary adjustments to minimize problem and issue impact on me

Now let's replace the word "airline" with "Project Manager" and the words "I" and "me" with "customer":

 

  • The customer received constant accurate status updates from the Project Manager
  • The customer received the updates in a timely manner from the Project Manager
  • The Project Manager admitted their problems and issues to the customer
  • The Project Manager listened to the customer's concerns and desires
  • The Project Manager offered the customer numerous alternatives
  • The Project Manager let the customer choose the alternative that worked best for them
  • The Project Manager made the necessary adjustments to minimize problem and issue impact on the customer

Do the above statements apply to the projects and programs in your organization?

Let's first consider what made this possible for the airline:

 

  • An acute understanding of the customer
  • An acute understanding of the goal
  • Advanced status monitoring mechanisms
  • Defined performance criteria and thresholds
  • Mechanisms to support timely notification
  • Knowledgeable situation analysis
  • Willingness to admit to mistakes/issues/problems
  • Authoritative decision-making

The above list requires the appropriate capabilities in people, process and technology. Sure, this situation is a microcosm in comparison to a full-blown project or program, but this experience provides a great analogy. It highlights those elements necessary to deal with projects that go wrong. It provides some insight into how we can satisfy our project customers even when faced with project calamity.

I can tell you that even though this trip was a disaster, I was kept informed, I had the information I needed to make decisions, and I always felt like my needs mattered. Instead of being disenfranchised, I was delighted.

Our project customers should feel the same way.

Steve Romero, IT Governance Evangelist
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By: Steve Romero
Steve Romero is the IT Governance Evangelist at CA Technologies, Inc. His mission is to help enterprises realize the full potential of their IT investments for strategic and competitive advantage. In this capacity, he acts as a strong advocate for the customer, speaking around the world to users, prospective...
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Use the Economic Downturn to Get Your Foot in the IT Governance Door

Published: March 05 2009, 02:45 PM | no comments
by Steve Romero

 

I firmly believe the current economic situation demands that enterprises address IT Governance and more specifically, IT investment decision making (PPM). I know I am repeating myself because I have said as much in previous posts. At the risk of sounding like a broken record, I will continue communicating this message. In doing so, I promise to offer suggestions in regard to leveraging the current economic downturn to further the objectives of IT Governance.

 

PPM provides the means for organizations to ensure they invest in the optimal efforts and endeavors to meet their goals and fulfill their strategies. After speaking to thousands of people and visiting dozens of individual companies, I have seen very few enterprises that have mastered this discipline. Study after study continues to show at least 50% of our IT projects/programs fail. I insist there is a direct correlation between that lack of IT effective PPM and project performance. I also acknowledge there are numerous significant barriers to establishing and institutionalizing this critical IT Governance process.

 

I don’t expect organizations in the midst of budget slashing and workforce reductions to be eager to undertake the difficult and daunting task of establishing IT Governance processes. So my first suggestion is to not characterize these efforts as IT Governance or the specific IT Governance process you choose to address. Instead, let’s use business terms.

 

First, understand the business problem you are trying to solve. For example, almost every organization is faced with a reduction in resources. This makes the allocation of those resources even more critical. This makes the identification of investment priority more critical. So advocate the establishment of the “business investment selection and prioritization program to ensure our constrained resources are working on the most important initiatives” – a major tenant of PPM.

 

There are a number of important aspects to note:

·         I did not use a single “technology” term. Use simple business language

·         I stated the problem we need to solve. Don’t introduce a solution where there is no problem. Know what is keeping your executives awake at night

·         I called it a “program” and not a process. I am a huge proponent of process management but I realize process is still a four-letter-word for most organizations. Yes, you will be defining, establishing, managing and monitoring processes, but don’t torpedo your effort before it begins by using a term that is viewed so adversely.

 

Get the right group of folks together to start making these critical investment decisions, and you will have your foot in the IT Governance door.

 

More to come.

 

Steve Romero, IT Governance Evangelist

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By: Steve Romero
Steve Romero is the IT Governance Evangelist at CA Technologies, Inc. His mission is to help enterprises realize the full potential of their IT investments for strategic and competitive advantage. In this capacity, he acts as a strong advocate for the customer, speaking around the world to users, prospective...
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