MINIMIZING RISKS, time, and costs is important to all companies. All projects, major or minor, should be on time and within budget—without excessive cost overruns and delays. Achieving these goals requires paying special attention to Process Evaluation, a most often undervalued and abused procedure.
New and improved systems and applications will, of course, continue to be mandatory for any company that wishes to stay competitive. Now, here comes the basic question: How do we achieve success without excessive costs and implementation delays? A key factor causing cost overruns and delays of all major projects is not necessarily the skills—or lack thereof—of the people on the project team, but is instead primarily a result of inaccurate assessment and definition of the processes.
What leads to this inaccuracy? Over the past decade, I have been directly involved in six major implementations and associated with several others. All were well organized and planned, yet they all suffered the same problem: delays caused by requirements not previously documented or understood. We know delays are going to happen. We construct project plans to accommodate the inevitable, yet major projects will most likely be delayed beyond what was anticipated. Can cost overruns and delays be eliminated? Theoretically, yes. In reality, they can be controlled and dramatically reduced, resulting in a significant reduction of delays and costs while achieving greater acceptance and satisfaction at all levels. Two vital commitments are required before the process examination and business requirement gathering begin.
Commitments are the foundation of the project. They define the boundaries to which a project team must conform. Two critical commitments are the commitments to change and time. Without these, achieving a thorough investigation and an in-depth understanding of the issues and processes will be severely compromised.
Commitment to Change. Recognize that, in most cases, process changes will be required. The mere fact that system or application changes are required to support the changing demands of the business should be an indicator to management that business processes may also be out of date.
William Wood has over 25 years of business experience and is a consultant specializing in supply chain, warehouse management, inventory control, order management, radio frequency data collection, and business processes. He has authored several white papers and was interviewed by Warehousing Management magazine for an article published June 1999. Early in 2000 he founded Amberwood Consulting Inc. in Minneapolis, Minn., USA, to serve the retail, manufacturing, and distribution industries.
Both management and employees must view change as an opportunity for improvement, not as a challenge to their existence and methods. A positive attitude at all levels must exist to allow for clear definitions of the processes. Because they are closer to an entrepreneurial style of operation, tier-two and -three companies adapt to change more readily than tier-one corporations, which generate greater than $450 million in revenue. (Classed according to revenue dollar volume, tier-two corporations generate between $150 million and $450 million in revenue, and tier-three, less than $150 million.) Tier-one corporations can achieve the positive attitude, but it will be more time consuming and will involve greater commitment by senior management in supporting this ideal.
The psychological and emotional well being of the company's employees is a major element of this commitment. When a decision is made to replace applications or modify processes, affected employees are usually not given enough information about a proposed change, leading them to speculate on how it will affect them. Negative rumors may start to flow shortly after the change is announced, hindering or seriously damaging the ability to achieve employee support and acceptance. A suspicious and nervous workforce will display reticence in divulging information and reluctance in accepting and supporting the new system. This inevitably adds costs to the project through retracing and restructuring processes.
The best way to avoid morale issues is to involve the employees from the outset. In large diversified organizations, this is difficult and can potentially add expense, but the effort will pay dividends later. When the announcement is made that process and system changes are to be initiated, the project manager must keep the affected employees informed and manage their expectations and fears.
Managing fears and expectations requires building rapport through direct and continuing contact with the employees. When scrutinizing the processes, employees may feel threatened and insecure, especially if they know of or perceive repetitiveness in their functions. All team members performing the process evaluation need to be aware of and sensitive to an employee's perceived threat of job loss.
Encouraging employee input and providing feedback on questions and issues shows concern for the employees as well as for the business. The best sources of information about the operation of the processes are the people closest to it—the line employees. Treat them with respect—as assets, not as liabilities.
Unless both management and employees agree to and support process change, don't expect new applications to deliver their full benefit and substantial savings.
What are key factors in obtaining and ensuring commitment to change? When preparing to initiate a process change, it's always wise to consider the following:
Thorough Examination. Examine all direct and indirect processes associated with the area of change. No process should be taboo.
Positive Attitude. Management must be a role model for the employees, accepting change as an opportunity to improve, not as a challenge to the success of the business.
Sensitivity. Change usually brings uncertainty. To avoid major productivity problems, management must be sensitive to the emotional well being of the employees.
Information. This is a two-way street. If employees are expected to share information, management must also be open about the reasons for and the objectives of the change project. Once the process examination begins, the project manager must take responsibility for keeping the employees informed.
Empowerment. Encourage employee participation in identifying and making process changes.
Commitment to Time. Beware of an overly aggressive schedule for any project! Although speed may be appealing, this only assures that money will be wasted and implementation delays will occur. Once this occurs, employee satisfaction and acceptance will be reduced, usually resulting in increased post-implementation support costs.
Time is arbitrary and relative. Time is an enemy to projects. Yet time is an investment in success. When studying negotiating methods, time is proven to have a detrimental effect on the negotiator who is under the time constraint. The same principle applies to projects: the shorter the time allotment, the greater the risk for underachievement.
Management must clearly demonstrate its support for the change initiative by providing sufficient time for completion of the entire investigative process. The project team should not be asked to cut corners in an attempt to save time and money. An experienced project manager can provide a reasonably accurate initial estimate for time and budget. It should be reviewed and— unless totally unreasonable—accepted. If the estimate is considered unreasonable, discussion and negotiation is warranted.
Can time be minimized, yet still achieve the goal of defining the processes? Yes, but there is a tradeoff: increased cost. Reducing the time allotment in the process definition stage will inevitably increase project costs. Why? First, assumptions will be made in order to save time investigating seemingly non-complex functions. The effects of this will not normally be seen until implementation, which will cause delays and increase costs. Second, it is possible for entire processes to be omitted through hasty and incomplete investigation. To avoid this, additional staff may be assigned, increasing project costs.
How do assumptions and disclosure affect time? Usually, insufficient time causes information gathering to be incomplete. Assumptions have their place, but normally we make them for future events based on past experiences or history. They have no place in assessing the effectiveness of current business processes. As an example, if you have two or more locations operating in a similar manner in separate geographic locations, is it safe to assume that each has the same business requirements? No! There will be regional differences, which need to be identified and addressed as part of the process definitions. There may also be subtle differences in processes or practices. When analyzing current processes, never make assumptions. Always invest the time to investigate. Reducing assumptions increases knowledge and reduces risks.
Full disclosure—sharing of information between business units, and business units and the project team—is mandatory for understanding processes and their interdependencies. Territorial boundaries have no place in the investigation and need to be removed if complete understanding is to be achieved. The project team requires time to eliminate these boundaries and encourage free exchange of ideas between departments and the team. Mutual trust and cooperation must be built. Understanding of the interdependencies of information and processes must be achieved through multiple interdepartmental sessions.
As with the commitment to change, there is little hope of realizing process benefits and potential savings from new application or systems unless management and employees commit to providing the necessary time to complete the investigative process.
What are the key factors in obtaining and ensuring commitment to time? It is important to:
Overcome Impatience. Don't insist on an overly aggressive schedule. It will result in increased costs, add pressure to the project team, and lead to reduced satisfaction.
Remove Assumptions. Encourage the project manager to eliminate assumptions and perform an in-depth analysis of the processes and practices.
Remove Territorial Boundaries. The business will be better served in the long run if time is taken to encourage free exchange of ideas among business units. The clearer the understanding of the interdependencies among units, the more refined the processes can become.
“KNOWLEDGE IS POWER” is an old adage that is certainly true. In an ever-changing business environment, a business must be flexible or it will cease to be competitive and will eventually die. Without an understanding of your business processes and requirements, you can't expect to maximize profits by streamlining and reducing costs. Knowledge allows you to position yourself to leverage new systems and technologies and capitalize on opportunities afforded by partnerships.
Learn from the mistakes of others. The ideas presented here are not new, but they are often overlooked or discarded in favor of a quick implementation, believing that this will hasten return on investment. More often than not, hasty implementation will only guarantee increased project costs and reduced ROI.
Is this approach for everyone? It should be. Everyone has had one or more experiences with large projects being implemented late and costing much more than was anticipated or budgeted. With these failures, attitudes become jaded and the belief becomes engrained that large overruns will always occur on major projects. An enlightened management team willing to provide support and funds for a thorough investigation of the processes will break the pattern.
Will following the ideas presented here guarantee that cost overruns and delays are eliminated? No, but what it will do is give you the power of control and the ability to reduce the risks that add to costs and delays. ■
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