VideoIt's often said that information technology is a field that lives and (too often) dies by the project. Even when a project isn't dying, it may be weak, sickly, or on life support. Large IT initiatives are difficult to manage and can prove disappointing, if not disastrous. Some progress has been made in recent years as project management has become a bona fide corporate discipline, but the latest statistics on success rates still leave plenty of room for improvement. (The Standish Group says that more than half of all IT projects still run late, exceed budget, or fail to deliver promised benefits.)
Nearly all projects fall into three phases: preproject work to justify the initial need (read: business case), postproject measurement of the project's overall effectiveness (read: ROI), and, in between, the most difficult phase of all: implementation (read: headaches).
During implementation, the best-laid plans often go awry, as changing needs, scope creep, untold delays, and an inevitable dose of Murphy's Law conspire to derail the effort at every turn. Yet companies do succeed in bootstrapping themselves into the future, leaving behind outmoded systems and ways of doing business. By following some best practices, project management can become more predictable and less painful, and perhaps even culminate in an outright celebration.
Such was the case for the finance department at Louisville-based Brown-Forman Corp., the $2.7 billion purveyor of Jack Daniels whisky, Finlandia vodka, and other spirits and wines. The company was burdened by a "Neanderthal" cash-management system that required treasury staff to re-key bank information for the company's numerous subsidiaries into spreadsheets for daily cash positions, and to post accounts-receivable receipts from paper bank statements, among other manually intensive practices. "We had what was essentially a spreadsheet-era treasury system," says executive vice president and CFO Phoebe A. Wood.
"It's not that the old system was broken, or that we were losing cash, not paying vendors, or not effectively concentrating cash and putting it to work and paying down our debt," notes Wood. "All of that happened. It's just that the processes were very inefficient and labor-intensive, leaving our cash analysts little time to do actual analysis. This severely limited our ability to manage our cash globally. We had cash dispersed to our subsidiaries sitting in various countries and bank accounts that was neither efficiently deployed nor controlled."
Improving that, Wood says, became a priority — and a major challenge. After executing a comprehensive feasibility study defining the project's scope and objectives, project managers got the green light to draft a project blueprint. That document encompassed the budget, task list, milestones, and associated change-management issues expected to crop up. The company designated a project leader (assistant treasurer Roger Shannon), created multiple working groups charged with exercising specific types of leadership, partnered with IT and the system's ultimate users, and established measurable ROI goals.
Who Does What?
All of those steps have been codified in an IT-governance framework that the company has developed over the past four years. Several "process councils" identify process improvements that can be achieved via IT projects, then present them to a steering committee. Projects are prioritized and assessed as to the resources required, then turned over to other teams for actual implementation.
That's a lot of teams, but Brown-Forman executives say the system gets all relevant parties involved and fosters true collaboration and buy-in. The steering committee includes CFO Wood, the company's chief investment officer, senior IT representatives, and the project leader. Sometimes it has the sole discretion to greenlight a project, but for particularly resource-intensive efforts approval from the CEO or even the board may be required.
Once a project is approved, it is turned over to a project team, which essentially charts the strategic direction by establishing milestones and determining what role an IT vendor or various consultants will play, as well as addressing the hands-on tasks of reaching each milestone.
Members of a project team typically include staff from within the company, such as senior executives from business units, HR, IT, and communications; comparable representation from the IT vendor; and, in many cases, an outside consultant as well. Since large IT projects are time-consuming, says Margo Visitacion, an analyst at Cambridge, Massachusetts-based Forrester Research Inc., careful selection of project staff is essential. "You're basically picking internal people whose day job is not the project, so you want to be sure you're selecting individuals who have both the required skills and the time." Phoebe Wood agrees, noting that, "You may have a project with a highly desirable payback, but lack the people to do it. You need to take into account all resource issues, including the availability of the right technical and business staff."
Some companies create a second project team to establish fiscal controls and monitor the budget, track any issues needing resolution, oversee quality assurance, and report the project's progress to the steering committee. Chris Jenkins, global solutions executive at IBM's Business Consulting Services office in Dublin, says the team must provide status reports "that are honest and open, even if they're damning. Both the steering committee and the project committee must be mature enough to understand that things will go wrong. The key is to manage such situations and not point fingers."
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