The document discusses IT project governance and the need to re-examine traditional views of success. It notes that while project management focuses on outputs like time and budget, true success requires governing projects to achieve intended outcomes and benefits. Proper governance involves boards and top managers guiding projects aligned with strategy and being accountable for realizing expected value. The document advocates governance standards like HB280 and AS8016 which emphasize outcomes over outputs and managing projects from the boardroom level.

1. IT Project Governance Presented by: Dr Raymond Young (MBA, MAICD) Practice Leader – Project Governance [email_address] originally delivered as lecture 8, INFO6007 Project Management in IT, University of Sydney

2. Background 1989 2009 1999 projects, projects, projects … Why? Why? Why? HB280 AS8015 ->ISO38500 AS8016

3. What is the success rate for IT projects? ________% What are the most important things you have been taught to do for your projects to succeed? You are probably wrong … “ the current ‘expert advice’ has less impact on success than previously believed” Young (2008) It is now week 8 … what have you learned?

4. 2/3 projects realise no benefits! $1,000 billion pa spent on IT. (Seddon & al 2002) 30% on projects (?) 10-20% (Clegg et al 1997) 30-40% (Willcocks and Margetts 1994) 15% (Standish 1999,2003) 2/3 of projects deliver no benefits whatsoever number of success stories reported are almost twice the number of failures 62% of projects are reported to have either met most or all performance criteria OK Some No Fail ROI 30%

5. IT project failure has been an issue almost since the dawn of business computing (Caminer 1958) . It has been studied intensively for the past 40 years (Lucas 1975, Lyytinen and Hirschheim 1987) but it remains a poorly understood phenomena (Sauer 1993, 1999). An enormous number of largely untested methodologies have been proposed and adopted (Checkland 1981, Strassmann 1995, Clegg et al. 1997). Rethinking project management “ dimensions thought to be important divide tasks, requirements scrubbing, KISS, reduce scope, simulation/scenarios, prototyping, pilots, testing, user participation, user surveys, publicising participation results, team meetings, user led teams, user committees and good relationships, user managed decisions and development, user commitment, monitor progress and promote open discussion, critical task focus, project organisation, external contracts and outsourcing, formal procedures, cost allocation structures, pre-scheduling, cost and schedule estimation, incremental approach, path-analysis, risk-driven project planning, physical arrangements, staff with top talent, seek champions, cross training, morale building, manage expectations, implementation games, training, role playing, study and screen potential actors, specification standards and methods, task and organisational analysis techniques, information hiding/abstraction and modelling, bench marking, flexible governance structures, task matching, contingency models, managing technology options, adapt authority and decision structure, modify process model, technical analysis, service assessment, gain management support, appropriate leadership, change authority or workflow, adopt/configure new organisational technologies (Lyytinen, Mathiassen et al) have no consistent impact on the success of computing”(Kraemer & King 1986). The traditional wisdom must be revisited

6. A analogy for understanding the significance of project governance

7. It depends on your definition of success MIS Success: User focus SIS Success: Organisational focus EDP Success: Technical focus Delone, W. H. and McLean, E. R. (2003) The Delone and McLean Model of Information Systems Success: a ten-year update Journal of Management Information Systems, 19:4 , 9-30. Net Benefits Information Quality System Quality Service Quality User Satisfaction Intention to use Use

8. Project Management Success Very strong emphasis in practice

9. Breakthrough #1: Exposing the [IT] blind spot Beyond Project Management success project management success is less important (Baccarini 1999) “ benefits are not delivered or realised by the project manager and project team, they require the actions of operations management.” (Cooke-Davis 2002) there is not a strong relationship between project management success and project success or between project management failure and project failure (Markus et. al. 2000)

10. The Global Financial Crisis? The catalyst for widespread adoption of the ‘benefits’ definition of success? Oversight blind (29%) or nil (16%) Increasing degrees of negligence Level of scrutiny (benign economy) 1:5 projects perceived to fail 2:3 projects fail New levels of scrutiny M anagement of large-scale expenditures is a fiduciary duty requiring careful oversight. The results were “tantamount to negligence”. Deloitte( 2007) What the Board Needs to Know About IT: Phase II Findings “ A pay structure that rewards origination without regard to investment outcomes is not appropriate” Michael Larkin, CEO Babcock and Brown (AFR 11 Nov 2008, p 84)

11. 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 The Global Financial Crisis? The catalyst for widespread adoption of the ‘benefits’ definition of success? Level of scrutiny (benign economy) 1:5 projects perceived to fail New levels of scrutiny M anagement of large-scale expenditures is a fiduciary duty requiring careful oversight. The results were “tantamount to negligence”. Deloitte( 2007) What the Board Needs to Know About IT: Phase II Findings “ A pay structure that rewards origination without regard to investment outcomes is not appropriate” Michael Larkin, CEO Babcock and Brown (AFR 11 Nov 2008, p 84)

12. “… ICT needs to be driven from the boardroom, not the backroom” Senator Helen Coonan, Minister for Communications, Information Technology and the Arts , “ IT is a board room issue: in the last 200 years, there have only been two or three significant changes in the productivity statistics. The first change was due to the industrial revolution … the last two are related to IT” Prof Steve Burdon (FAICD), UTS Earlier calls for change

13. Standish (1996) User involvement (19) TMS (16) Clear statement of requirements (15) Proper planning (11) realistic expectations (10) smaller project milestones (9) Competent staff (8) ownership (6) clear vision & objectives (3) hard working, focussed staff (3) Project methodologies (35) Clear statement of requirements (15), Proper planning (11), smaller project milestones (9) User ( 25): User involvement (19), ownership (6) TMS (16) High level planning (13): realistic expectations (10), clear vision & objectives (3) Project staff (11): Competent (8), hard working and focussed (3) Reference: Young and Jordan (2008) “ Top Management Support: mantra or necessity ” International Journal of Project Management Vol 26, pp713-725 Re-examining the traditional wisdom Top Management Support: mantra or necessity?

14. Case Studies HB280 – 2006 Descriptive Case Studies Goles and Hirschheim 2000; Tashakkori and Teddlie 2003; Benbasat and Zmud 1999 Multiple-case study design 2 typical organisations, 3 exemplary organisations Case history developed through interviews with: project sponsors, top managers, project team, stakeholders from multiple levels Rigour through multiple sources of evidence: interviews, project documentation, observation, critical review (at 3 levels) Young and Jordan 2002a; Young and Jordan 2002b; Young 2003; Young and Jordan 2003

15. Breakthrough #2: TMS – t he most critical success factor Reference: Young (2006) HB280 Case Studies – How Boards and Senior Management have Governed ICT Projects to Suceed (or Fail). Standards Australia

16. If TMS is the most important CSF, then much of our current research and practice is misdirected. HB280 has informed AS8015 which has just been accepted as an international standard on the corporate governance of IT (ISO38500) HB280 findings are being incorporated into AS8016 A major shift in emphasis may be required: Boards and top managers may have to accept that they personally have the most influence whether a project succeeds or fails Boards, top managers and their advisors may have to accept that the current ‘expert advice’ has less impact on success than previously believed. Further research is needed to explain how TMS influences success and to develop credible guidelines for practice. Breakthrough #2: Top Managers Must Govern Projects to succeed

17. How do you Govern Projects?

18. Governing Projects Achieving Outcomes & Realising Benefits Strategy Defined outcomes Delivered outcomes Governance Benefits Enabling projects

19. Corporate Governance, Governing Projects and Project Management Standards: OECD Guidelines ASX Guidelines AS8000 Focus on Vision and Mission and described in Corporate Plan (normally 3 years) Corporate Governance: The system by which organisations are directed and controlled Standards: PRINCE2 , MSP PMBOK, OPM3 Focus on Outputs (time, budget, quality, stakeholder support, outcomes) Project Management: The way of guiding and managing projects to ensure successful completion from start to end Standards: Gateway HB280 AS8016 www.valuedeliverymanagement.com Focus on Outcomes (Key Initiatives and business benefits) and described in Departmental Annual Plan Governing Projects: The connection between corporate governance & project management

20. 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% 40% 5-23% 33-67% 0-13% ITIL, COBIT Projects PMBOK, PRINCE2, etc Conformance & Behaviour: culture for issues to be raised? ??% 6Q Governance™ HB280, AS8016 Business processes ICT Operations Support Changed Business Processes Changed ICT Operations Initiate

21. Governance vs Management The ITG Harmonisation Map Val IT CobiT ITIL ISO20000 PMBOK PRINCE2 Etc. Automation C.M. CMM CMMI CobiT Spice Etc. The 6 Principles ISO38500 © Brian O. Cusack

22. AS8015, AS8016 AS8015: ICT Directors do not manage Directors: Evaluate-Direct-Monitor Managers: Plan-Do-Check-Act Principles-Based Establish clearly understood responsibilities for ICT Plan ICT to best support the organisation; Acquire ICT validly Ensure ICT performs well, whenever required Ensure ICT conforms with formal rules Ensure ICT use respects human factors AS8016: Projects Why do we invest in projects? Directors: Business Benefits Managers: on-time, on-budget Principles-Based Responsibility Those responsible for achieving business outcomes are clearly identified and held accountable Strategy … aligned with business requirements Acquisition business benefits … are clearly identified Performance Measures … agreed before a project is approved. Assurance …outcomes will be achieved. Conformance Human Behaviour The measures of success are aligned to stakeholders’ needs and motives. Stakeholders are effectively encouraged to raise issues …

23. A ValIT understanding of Governance Kubernán (gr): to steer a ship – the process of continually orienting and adjusting “ Managing an uncertain journey to an uncertain destination”

24. Without Effective Governance… Can’t kill projects Leads to.. Too many projects Quality of execution suffers Underestimation of risks and costs Projects not aligned to strategy Over budget Projects Late Business needs not met Lack of confidence (in IT) Results in.. Benefits not received Situation Reluctance to say no to projects Lack of Strategic Focus Projects are “sold” on emotional basis -- not selected No strong review process Overemphasis on Financial ROI No clear strategic criteria for selection

25. Financial/Strategic Implications Current Performance (68% under) Source: R. Young, “What is the ROI for IT Project Governance? Establishing a benchmark.,” in 2006 IT Governance International Conference (Auckland, New Zealand, 2006) OK Some No Fail ROI 30% OK Some Fail ROI 130% Better Performance (43% under) OK Cancel ROI 220% Excellent Performance (15% cancelled)

26. Questions & Discussion Boardroom readiness Case Study History og governance