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Presentation to PMI GT ISLIGJanuary 10, 2001

Hitesh SethSenior Manager, Cap Gemini Ernst & Young

Managing IT Delivery Risk

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Objectives / TOC

Background

IT Disasters

Common IT Delivery Risks

Risk Management Leading Practices

To Identify common risk areas and leading practices to overcome risks in IT implementation projects.

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Who is Cap Gemini Ernst & Young?

A global Management Consulting and I.T. services firm combining the strengths of Cap Gemini with E&Y Consulting.

A company with demonstrated success in outsourcing and joint venture business ventures with companies like Sprint, Farmland Industries, EDF, British Steel and PruessenElektra.

With a head office in Paris, it employs more than 57,000 people worldwide, operating in 31 countries and reports global revenues of 7.7 billion euros.

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Who is New Horizons?

A joint venture between Ontario Power Generation (itself a successor company to Ontario Hydro) and CGEY to provide full-range IT services to the North American energy marketplace.

Immediately focused on continuing to provide IT services to OPG and related entities: Bruce Power, Retail Energy Hub.

The North American energy sector (especially energy generation) represents a multi-billion dollar emerging market as a result of Energy deregulation.

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Scope

Change

Uncerta

inty

Dealing with

People

Risk

Factors

Evolving Scenarios

Quality Management

Training Experience

Ski

lls

Kn

ow

led

ge

Time & Effort

Challenges of Project Management

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Software Project Statistics :Standish Group 1994 U.S.

Application DevelopmentApplication Development250 Billion / Year175,000 Projects

250 Billion / Year175,000 Projects

Project StatisticsProject Statistics31% - Cancelled16% - On time / on Budget 53% - Over Budget / Schedule or under Scope

31% - Cancelled16% - On time / on Budget 53% - Over Budget / Schedule or under Scope

IssuesIssues222% - Average Schedule Overrun189% - Average Cost Overrun 39% - Average Scope Underrun

222% - Average Schedule Overrun189% - Average Cost Overrun 39% - Average Scope Underrun

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Common IT Delivery Risks

1. Ineffective Sponsorship & Commitment

2. Loose Definition of Requirements.

3. Misunderstanding success.

4. Doing too much.

5. Technology Complexity

6. Not having the right skills.

7. Demanding business timing. Unrealistic deadlines.

8. Aggressive business change.

9. Pitiful project management.

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1. Ineffective Sponsorship & Committment

Also Disguised As…

Changing sponsorship.

Multiple business leaders / companies that do not agree. Key users are different from funder.

Wrong Technology

Leading Practices

Steering Committee for Issue Resolution

Demonstrating success to management

Apply appropriate priorities

Motivating staff

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Keep the sponsor and users actively involved in the entire

project life cycle to increase the likelihood that:

Keep the sponsor and users actively involved in the entire

project life cycle to increase the likelihood that:

The correct problems are addressedThe correct problems are addressedThe appropriate priorities are followedThe appropriate priorities are followedThe solution is affordableThe solution is affordableThe solution deals with the problemsThe solution deals with the problems

The correct problems are addressedThe correct problems are addressedThe appropriate priorities are followedThe appropriate priorities are followedThe solution is affordableThe solution is affordableThe solution deals with the problemsThe solution deals with the problems

Engage clients:Engage clients:

Task forcesTask forcesPrototype systemsPrototype systemsIncremental implementationIncremental implementationWalkthroughsWalkthroughsPilot sitesPilot sitesStatus reviewsStatus reviews

Task forcesTask forcesPrototype systemsPrototype systemsIncremental implementationIncremental implementationWalkthroughsWalkthroughsPilot sitesPilot sitesStatus reviewsStatus reviews

Sponsorship & Commitment - Risk Management

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2. Loose Definition of Requirements

Also Disguised As…

“Let me describe it verbally…”

“Show me a prototype, then I can provide details…”

Leading Practices

Define the scope & deliverables in a project charter.

Model the process and define a process owner.

Iterative definition and deployment.

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3. Mis-understanding Success.

Also Disguised As…

Relying on users to know the complete business process.

Business case is outdated, or not done.

“Out of left field” requirements.

Leading Practices

Understand / update the business case.

Model the process and define a process owner.

Find the appropriate business approver.

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4. Doing too much.

Also Disguised As…

It will take over a year to complete…

We can correct small problems, after we implement.

Leading Practices

Deploy solutions iteratively to limit technology and business complexity.

Assess size limitations on the project.

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SchedulesSchedulesEffortEffortElapsed timeElapsed time

EffortEffortElapsed timeElapsed time

TechnologyTechnologyInterfaces to other systemsInterfaces to other systemsInterfaces to other technologiesInterfaces to other technologiesBomb-proofing requirementsBomb-proofing requirementsExtent of functionalityExtent of functionalityVolume of transactionsVolume of transactionsNumber of vendorsNumber of vendors

Interfaces to other systemsInterfaces to other systemsInterfaces to other technologiesInterfaces to other technologiesBomb-proofing requirementsBomb-proofing requirementsExtent of functionalityExtent of functionalityVolume of transactionsVolume of transactionsNumber of vendorsNumber of vendors

OrganizationOrganizationTeam sizeTeam sizeNumber of sitesNumber of sitesNumber of organization unitsNumber of organization units

Team sizeTeam sizeNumber of sitesNumber of sitesNumber of organization unitsNumber of organization units

Doing Too Much: Size Assessment

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5. Technology Complexity

Also Disguised As…

Multiple mixed e-business tools

Unstable development environment

High Performance, Reliability or Scalability Requirements

Leading Practices

Pilot solutions.

Use technical experts. Leverage the knowledge of others.

Limit the “newness” of the solution

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Ensure that all pieces of the solution will fit together by the end of the project and improve communication of both the problem and the proposed solution with:

Walkthroughs:• Analysis• Design• Programming• Testing

Technical review group

Documentation:• Use Cases• Prototypes• Models• Specifications

Modular design:• Hierarchical Structure• Defined interfaces• Logical data structure• Reusable objects

Top down architectures:

• Application• Data• Technology

Technology Complexity: Define Development Approach

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6. Not having the right skills.

Also Disguised As…

The team is working overtime and stressed.

The project estimate was wrong.

Leading Practices

Find experts in each solution domain: infrastructure, new media, development, business area, etc.

Procure experts externally, if not available internally.

Triangulate estimates.

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Team Location

Team Location

Experience of:Experience of:

Project manager on similar projects

Team members working together

Team with the application

Project manager on similar projects

Team members working together

Team with the application

Dedicated assignment of:

Dedicated assignment of:Project manager

User and technical staff

Project manager

User and technical staff

Project team productivity will be impacted by:

Acquiring the Right Skills: Staffing Considerations

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7. Demanding business timing. Unrealistic deadlines.

Also Disguised As…

We will miss the market opportunity if we do not implement by…

Leading Practices

Manage expectations. Procure experts who have done it before.

Consider the implementation approach. Deploy solutions iteratively to minimize technology and business change.

Assess implementation readiness to articulate the downside risk.

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The selected implementation strategy needs to be understood by all management and staff in terms of rationale, benefits, and consequences.

Strategies can include:

Quick and dirtyBig Bang Incremental or phased

Demanding business timing: Implementation Approach

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8. Aggressive business change.

Also Disguised As…

We want to eliminate our paper billing system with a “wireless internet CRM system”

Leading Practices

Deploy solutions iteratively to minimize technology and business change.

Implement Communications & Training programs.

Pilot solutions and business processes.

Prepare contingency plans.

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Business Strategy

Recognize that technology will impact the integration of people / organization, business process and business strategy.

People

TechnologyProcess

Managing business change.

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10. Pitiful project management

Also Disguised As…

Cost overrun, Schedule overrun, scope reduction, ...

Leading Practices

Use PM best practices.

Manage “up”.

Focus on risk management.

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System implementation / development methodology

Scope control approach

Issue resolution approach

Quality management strategy

Knowledge coordination approach

Ability to plan, estimate, schedule, perform to overall plan, and the quality of the final system, will be directly related to use of:

Project Management Risk Factors

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Risk Management

1. Recognize the risks

2. Utilize risk management techniquesOptimize project structure

Plan and control project

Engage users

Perform technical reviews

Conduct risk abatement

Conduct external risk reviews

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SponsorSponsor

SteeringCommitteeSteering

Committee

Internal AuditSecurity

Internal AuditSecurity

ProjectManagerProject

Manager

ProjectAdministration

ProjectAdministration

BusinessCoordination

BusinessCoordination

TechnicalCoordination

TechnicalCoordination

EnterpriseIT PlanningEnterpriseIT Planning

Enterprise Data Management

Enterprise Data Management

OperatingUsers

User Administration

SystemDevelopment

DataManagement

TechnicalServices

OperationsServices

ProductionServices

Project Functional Organization

QualityAssurance

QualityAssurance

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Limit innovationsLimit innovationsAvoid “the bleeding edge”Match technology literacyControl rate of change

Avoid “the bleeding edge”Match technology literacyControl rate of change

Constrain design options

Constrain design options

Avoid the “perfect” solutionRecognize unknowns and

futures

Avoid the “perfect” solutionRecognize unknowns and

futures

Limit project size /durationLimit project size /duration

Phase deliveryImplement 80% solutions

Phase deliveryImplement 80% solutions

Establishtraining programs

Establishtraining programs

Develop standards/guidelinesDeliver trainingProvide support

Develop standards/guidelinesDeliver trainingProvide support

Reward

Success

Risk ManagementUtilize Risk Abatement Strategies