Australian Institute of Company Directors 13 April 2010
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Australian Institute of Company Directors 13 April 2010

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Director Briefing - Building Capacity through IT - the key role of project governance & guidelines

Director Briefing - Building Capacity through IT - the key role of project governance & guidelines

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  • I’m going to build on Mark’s presentation but from a different perspective: I’m going to focus on projects because in my experience board and top management decision-making tends to focus on the merits of specific investments rather than on the broader principles of IT governance. I’ll also broaden the topic because they’re almost always business projects rather than IT projects, and I think it is unhelpful to understand them as IT investments.
  • Most companies would say it’s up to management to define what the business needs … it is the boards responsibility to ask questions to ensure that management has really thought through the bigger picture Some board members were saying we should do more, some less … [big project risk vs strategic risk of moving too slowly] “ The board members I talk to are very comfortable if there is someone taking responsibility and particularly comfortable if it’s McKinsey or one of the major firms”; “ most [boards] are very content to delegate it to management … there is a tendency to accept the recommendations of management, which tend to echo the recommendations of the consultants … there is no thorough analytical review in the way you would in other areas where the directors know what’s going on”; “ for all the Standards that exist, there is no guidance on how to go about making the decisions to implement an ecommerce strategy” ; “ management is gathering tons of information and don’t know how to present it”; “ are the board [receiving] summaries, no … it’s difficult for directors to make good decisions”; with technocrats, the only three things you can be assured of are: nothing would get finished on time, it would always cost vastly more than predicted and it would never do what it was promised to do” I do stress to boards that they’re not IT issues because they’re business issues.
  • Most companies would say it’s up to management to define what the business needs … it is the boards responsibility to ask questions to ensure that management has really thought through the bigger picture Some board members were saying we should do more, some less … [big project risk vs strategic risk of moving too slowly] “ The board members I talk to are very comfortable if there is someone taking responsibility and particularly comfortable if it’s McKinsey or one of the major firms”; “ most [boards] are very content to delegate it to management … there is a tendency to accept the recommendations of management, which tend to echo the recommendations of the consultants … there is no thorough analytical review in the way you would in other areas where the directors know what’s going on”; “ for all the Standards that exist, there is no guidance on how to go about making the decisions to implement an ecommerce strategy” ; “ management is gathering tons of information and don’t know how to present it”; “ are the board [receiving] summaries, no … it’s difficult for directors to make good decisions”; with technocrats, the only three things you can be assured of are: nothing would get finished on time, it would always cost vastly more than predicted and it would never do what it was promised to do” I do stress to boards that they’re not IT issues because they’re business issues.
  • Most companies would say it’s up to management to define what the business needs … it is the boards responsibility to ask questions to ensure that management has really thought through the bigger picture Some board members were saying we should do more, some less … [big project risk vs strategic risk of moving too slowly] “ The board members I talk to are very comfortable if there is someone taking responsibility and particularly comfortable if it’s McKinsey or one of the major firms”; “ most [boards] are very content to delegate it to management … there is a tendency to accept the recommendations of management, which tend to echo the recommendations of the consultants … there is no thorough analytical review in the way you would in other areas where the directors know what’s going on”; “ for all the Standards that exist, there is no guidance on how to go about making the decisions to implement an ecommerce strategy” ; “ management is gathering tons of information and don’t know how to present it”; “ are the board [receiving] summaries, no … it’s difficult for directors to make good decisions”; with technocrats, the only three things you can be assured of are: nothing would get finished on time, it would always cost vastly more than predicted and it would never do what it was promised to do” I do stress to boards that they’re not IT issues because they’re business issues.
  • Most companies would say it’s up to management to define what the business needs … it is the boards responsibility to ask questions to ensure that management has really thought through the bigger picture Some board members were saying we should do more, some less … [big project risk vs strategic risk of moving too slowly] “ The board members I talk to are very comfortable if there is someone taking responsibility and particularly comfortable if it’s McKinsey or one of the major firms”; “ most [boards] are very content to delegate it to management … there is a tendency to accept the recommendations of management, which tend to echo the recommendations of the consultants … there is no thorough analytical review in the way you would in other areas where the directors know what’s going on”; “ for all the Standards that exist, there is no guidance on how to go about making the decisions to implement an ecommerce strategy” ; “ management is gathering tons of information and don’t know how to present it”; “ are the board [receiving] summaries, no … it’s difficult for directors to make good decisions”; with technocrats, the only three things you can be assured of are: nothing would get finished on time, it would always cost vastly more than predicted and it would never do what it was promised to do” I do stress to boards that they’re not IT issues because they’re business issues.
  • Most companies would say it’s up to management to define what the business needs … it is the boards responsibility to ask questions to ensure that management has really thought through the bigger picture Some board members were saying we should do more, some less … [big project risk vs strategic risk of moving too slowly] “ The board members I talk to are very comfortable if there is someone taking responsibility and particularly comfortable if it’s McKinsey or one of the major firms”; “ most [boards] are very content to delegate it to management … there is a tendency to accept the recommendations of management, which tend to echo the recommendations of the consultants … there is no thorough analytical review in the way you would in other areas where the directors know what’s going on”; “ for all the Standards that exist, there is no guidance on how to go about making the decisions to implement an ecommerce strategy” ; “ management is gathering tons of information and don’t know how to present it”; “ are the board [receiving] summaries, no … it’s difficult for directors to make good decisions”; with technocrats, the only three things you can be assured of are: nothing would get finished on time, it would always cost vastly more than predicted and it would never do what it was promised to do” I do stress to boards that they’re not IT issues because they’re business issues.
  • To survive, thrive and also to minimise the governance backlash, the first step must be to get the right information needed to govern effectively. The board bears the responsibility to set clear guidelines and expectations about the kinds of information they want to see filter up. What benefits are being targeted? [how is this consistent with our strategic priorities?] Do we have the organisational capacity to realise these benefits and what other risks are involved? How will we measure success? Do we have the right person driving the change? Are there any warning signs that the project is going off track? Are the benefits being realised? These questions seem simple but none of the directors I have spoken to had an effective process to terminate failing projects. Benefits are usually quantified (66%), but they are often overstated (27%) [i] , change is not always considered (40%) [ii] , individuals are not held accountable (5-23%) and few organisations track benefits through to realisation (10%) [iii] . Organisations do not focus on the true determinants of success. [i] Chad Lin, Graham Pervan, and Donald McDermid, “IS/IT investment evaluation and benefits realization issues in Australia,” Journal of Research and Practice in Information Technology 37, no. 3 (2005): 235-251 [ii] KPMG, “Global IT Project Management Survey: How committed are you?,” 2005, http://www.kpmg.com.au/Portals/0/irmprm-global-it-pm-survey2005.pdf [iii] John Thorp, “Unlocking Value - Delivering on the Promise of Information Technology,” in Delivering Value , 2008, http://www.isaca.org.au/modules.php?op=modload&name=News&file=article&sid=28

Australian Institute of Company Directors 13 April 2010 Australian Institute of Company Directors 13 April 2010 Presentation Transcript

  • Building Capacity through: Governance of Projects (enabled by IT) Dr Raymond Young GAICD, MBA Assistant Professor Faculty of Information Sciences and Engineering [email_address] AICD Directors Briefing Sydney, 13 April 2010 © Raymond Young 2010
  • Inside the head of boards and top managers Projects On-time On-budget Inside the head of project managers Young and Jordan 2008 Kwak and Anabari 2009 VIC 100b Young and Jordan 2002 Strategy Governance Microscope Projects Telescope
  • Inside the head of boards and top managers Projects e-commerce Risk 13 Dir: 60+ boards Strategy should be developed by management E-commerce is important but strategy is hard … 3 approaches – (2) get an expert Few have IT background Widespread delegation to mngt / consultants Young and Jordan 2002
  • Inside the head of boards and top managers Projects Strategy On-time On-budget Inside the head of project managers Young and Jordan 2008 [2] I would have thought it would be the opposite … are there stats by industry? [3] valuations are heavily discounted whenever a big IT project is announced [4] they hardly ever define adequately what success looks like [1] That’s probably about right… Telescope Microscope Projects
  • Inside the head of boards and top managers Projects Inside the head of project managers
    • It’s no better with other types of projects
    • ¾ of mergers and acquisitions never pay off
    • 2/3 of IT projects deliver no benefits whatsoever
    • most large capital projects fail to live up to expectations
    • majority of efforts to enter new markets are abandoned in a few years
    • 70% of new manufacturing plants are closed in their first decade
    VIC 100b
  • Inside the head of boards and top managers Projects On-time On-budget Inside the head of project managers Young and Jordan 2008 [3] Sponsors definitely drive success … we would need to see a track record of this working [4] You’ve definitely got this right by putting the strategy first [1] Yes … I think you could sell that. A directors job is to ask questions.
  • Assessment of tools and frameworks Where to focus effort to engage top management Governance of Programmes Programme management Governance of Programmes Programme management Efficiency Effectiveness Any benefits Benefits aligned to strategy Realisation of strategic goals Portfolio management Project Management On-time On-budget Avoid duplication Products/ Outputs Programme Portfolio Management Victorian investment frameworks
  • Governance Evaluate Direct & Monitor Investment: benefits or terminate? Strategy/capability: how much change is required? Investment & Strategy: Benefits / alignment? Responsibility: Project Sponsor? Performance & Behaviour: measures and motivation? 67%->40% Business Case 40% ? MSP? 5-23% 33-67% ChangeTracking™ 0-13% Benefits Realisation ITIL, COBIT Projects PMBOK, PRINCE2, etc Conformance & Behaviour: culture for issues to be raised? ??% HB280, AS8016, 6Q Governance™ Business processes ICT Operations Support Changed Business Processes Changed ICT Operations Initiate