Kerry Quinn co-wrote this blog post with Nikhil Bhilegaonkar
In this age of digitally driven capabilities and business models, organizations are under constant pressure to evolve to the rhythm of changing technologies. The shift from legacy systems to advanced ones is an uphill task. Not only is it technically complex, but it's also daunting to ensure that evolving technology continues to meet the objectives of the business. Add to that the ever-increasing complexity of data management and the need to stay current with an evolving technology ecosystem, and you’ve got yourself an Everest to climb. Surely, the climb isn’t impossible, but many companies fail to reach the summit, and many of those that do, fall short of the desired business value.
Many organizations are trying to run before learning to walk, making huge investments to develop technologies without fully understanding the business requirements. A never-ending loop of changing requirements and stakeholder priorities can delay and dilute the desired business value.
Failure in these transformation projects results in cost overruns, loss of competitive advantage, and less-than-expected returns. The impact of these failures can be so intense that many organizations fail to recover from the financial setback and are forced to shut down business. (According to a report by McKinsey, 17 percent of failed IT projects pose such a risk). But why is it that so many companies fail to avoid transformation-related pitfalls? There are several reasons that companies meet this fate, including lack of vision, poorly-defined and managed scope, insufficient understanding of requirements, lack of senior leadership involvement, and misallocated resources. As varied as these problems may appear, all of them result from ineffective program management.
A clear vision, alignment with the organization’s capability roadmap, and rigorous program management techniques are keys to success for aligning stakeholders and meeting expectations. A program without clear alignment to business strategies or a technology road map often takes detours to set new targets and takes new approaches to achieve its objectives, delaying the project and increasing the cost in the process. McKinsey reports that 45 percent of IT transformation projects (with a budget greater than $15 million) go over budget. Seven percent of them fail to adhere to the timeline. Fifty-six percent provide value that is lower than what was estimated at the outset of the project.
In our experience, there are four program management practices that make a real difference in large-scale transformations. These practices build on each other and guide organizations to avoid consequential pitfalls.
- Consistently track and measure information. Effective program management at a large scale includes consistent monitoring of tasks, milestones, dependencies and resources. It’s critical to ensure that the governance model isn’t too complex and cumbersome so that information flow and decision making is clear. For large-scale transformations, delivering according to plan requires tracking mechanisms and program analytics that confirm progress and identify outliers.
- Act on insights gleaned from that information. With the full volume of monitoring data and program information available, effective program management efforts distill the information to actionable insights. Effective program management acts on the information at hand and orchestrates mitigation and resolution by senior leaders, functional SMEs and other stakeholders.
- Predict likely events based on historical trends. Effective program management teams take the next step by looking ahead to identify trends, the likelihood of recurrences, assumptions that may not hold and dependencies that may not capture a new reality. This is where effective program management helps with scenario planning, guiding the organization with insights and options to more accurately chart the way forward.
- Prevent pitfalls by guiding with action. Simply predicting future events isn’t enough. Effective program managers compare scenarios and mitigate risks to increase the likelihood of success. This is where effective program management becomes a strategic planning engine, driving the organization with prioritization, perspective, and tangible solutions to achieve the desired impact.
Many program management teams focus heavily on these first two steps, tracking and acting on information. The real differentiation comes in predicting and preventing scenarios that will jeopardize success. Predicting and preventing situations that are grounded in trends measured across the program, arms program leadership with insights to make data-driven decision making.
The need for proactive program management supporting large transformations is increasing with every passing day. A day spent pondering over its benefits and drawbacks is a gift to a competitor. Although the journey to operationalizing business processes with digital technologies is full of roadblocks and potential perils, it is achievable with a focused approach and diligent program management capabilities.