where's the payback?
James D. McFarlin
More than ever before, the pressure is on in today's reengineered, reorganized, downsized business environment to produce bottom-line results. More organizations are turning to project management to improve business results with better management of resources and delivery schedules. And better definition of the results from project management is on the way—witness the recently chartered PMI research project to study the benefits/payback realized from project management .
The centerpiece of much of the recent flurry in project management activity lies in software tools. According to Sentry Market Research, PC-based PM tool purchases were expected to be the second-fastest growing category in 1994, with an increase of 70 percent . But tools are not solutions. The truth is, many buyers miss much of the payback from their project management software tools investment. Why?
Why is the Payback Low?
Many organizations anxiously purchase a project management software tool, install it, stand back, and expect their people to be better project managers. Post-purchase expectations are for improved scheduling of resources, readily available status information, better communications, and a more effective, more efficient project-oriented organization. Guess what? That's right: the hoped-for results do not materialize and disillusionment starts to set in.
To get bottom-line payback, selecting and buying a software tool just gets you to first base. Successfully crossing home plate comes from proper implementation, and implementation takes investment. You might ask, “What investment?” The investment you need to make to derive some payback from your project management tool. This investment, as shown in Figure 1, is in four levels: installation (software purchase and installation), training (project management and tool instruction), implementation (processes and procedures), and integration (making the tool a part of your business practices).
Each level of investment has a correspondingly higher level of return, or payback. Figure 2 shows an approximation of the cumulative value of a successful project management implementation. Many organizations—perhaps three-quarters or more—stop after completing the installation phase. This can result in a low or even negative payback, manifested in high levels of frustration, increased time learning and using the tool, unavailability of reports, and overall wasted effort. The net result from an installation-only approach can be a major setback to an organization's project management initiative.
Figure 1. Getting the Payback from Project Management Investment
Figure 2. Cumulative Value of a Successful Project Management Implementation
Training is an essential step to success in realizing payback. However, expecting returns from a training-only approach is similar to expecting your teenager to be able to cruise the freeways after having been instructed on the car's operation, reading the owner's manual, and perhaps taking a tutorial spin around the block. There is more to be done to achieve real payback from your project management investment, and the “more” is in the processes and procedures associated with implementation.
In today's software marketplace, the investment you are willing to make for implementation is typically based on its price. For example, the relative low price of word processing software results in people learning it “by the seat of their pants” instead of through formal training or structured implementation. The low price of project management software often subjects it to the same treatment. Although the cost of word processing and project management products is comparable, there is a vast difference between the two. Word processing software is an application. Project management software is a sophisticated tool for the discipline of project management. Payback rises when it is treated as such.
What Is the Solution?
Realizing the payback from project management tools involves a combination of tool training, project management knowledge, and implementation of project management processes with the tool. A methodology for implementing project management tools based on experience with top-tier organizations was developed in 1992–93 by Far West Consulting (now part of Applied Business Technology). Using this approach clients reported:
- Improved customer service
- Reduced time to market
- Improved cost/quality in software development.
The methodology utilizes a four-phase approach: initiation, definition, development, and delivery.
Initiation is where it all gets started. Project management needs are determined, and an approach for meeting those needs is identified. The scope and objectives of the project are identified, and areas for process improvements are determined. A specific course of action is proposed, a project charter is developed and presented to management, and management gives the go-ahead to proceed with the implementation. This phase is your platform for moving forward by asking: “What are the primary objectives—improved productivity, reduced cost, faster system development time?”
The Phases of Project Management Systems Implementation
It is crucial at this stage to identify, understand, and document the goals and expectations of implementing the tool.
Scope and objectives are defined, process improvement potential and a specific course of action is identified, and management gives the go-ahead to proceed.
It is during this phase that the framework established in the previous phases is actually “launched.”
Users learn about the project management tool and how the organization intends to use it and incorporate it into business processes.
During definition, the working project team is formed and responsibilities defined. Mechanisms for communications are set up and customer “audiences” are identified. Milestones and measures of success are defined. Decisions made during this phase will guide the direction of the remaining phases of the implementation. It is crucial at this stage to identify, understand, and document the goals and expectations of implementing the tool. This is the only way in which to truly assess success.
Development focuses on the users’ applications and needs. It is during this phase that the framework established in the previous phases is actually “launched.” Information roll-up needs are determined and reporting requirements are identified. Business processes and the project management tool are integrated. Templates for various applications and resources are created. Some considerations during this phase are: How will the project management tool be utilized? What are the audience's needs for reporting—project management, MIS management, strategic planning? How will those needs be met through the reporting capabilities of the system?
In the delivery phase users learn about the project management tool and how the organization intends to use it. Proper training is essential to obtaining optimum results. A comprehensive training curriculum should cover basic through advanced features of the project, a management overview, advanced reporting, and other general or specific topic areas as appropriate. People often ask why training is conducted so late in the implementation process. However, training provided at this point in the process yields greater results, as the courses can incorporate the key elements defined in earlier phases. For example, standards established are introduced, custom reports are presented, and the integration of business processes with the tool is demonstrated.
Once the initial training program is complete, a post-implementation review is conducted to determine if the defined measures of success for the implementation effort were achieved. In addition, ongoing training programs and process improvements are addressed. Ongoing training is necessary for new people coming into your organization and to keep skills current with new features of the software released by the vendor. Ongoing process improvements are necessary due to the evolution of processes in general. Some of the new processes may need fine-tuning, while other previously successful processes may become bottlenecks within the operation.
Keys to Success
Complete implementation of a project management tool is an involved process that should be well planned and executed. The specific steps for integrating a project management tool vary somewhat from organization to organization. However, regardless of the tool being implemented or the specific organization, several key factors are essential to providing the results you seek. We have found five keys to success for implementing project management tools:
- Secure management's commitment. This is essential to the success of your project.
- Assign a project manager for the implementation.
- Build an implementation plan as you should for any project.
- Define your training needs and obtain education for your users.
- Implement both the tool and the process. Your software tool must be implemented as part of your overall process for managing projects.
The sophistication of project management software tools available today, plus the need to integrate their use with your organization's way of doing business, places a high importance on a well-designed, complete implementation process. The value of project management tools and methodologies increases exponentially as you change your processes to accommodate them and equip your people with the training to be successful. Realizing payback from the successful implementation of project management tools is gained by viewing the implementation process as a project itself and committing the project elements—resources, time, and money—necessary to make it happen. ∎
1. PMI Educational Foundation. 1995. Study of Organizational and Financial Benefits of Project Management to Corporate Organizations. PM Network (Jan), p. 51.
2. 1994 Software Market Survey. Sentry Market Research.
James McFarlin is vice president of North American sales for Applied Business Technology Corporation, a supplier of project management tools and services. He is a member of the PMI project team studying the payback from project management.
PM Network • May 1995