According to the most recent PMI Report, “The High Cost of Low Performance,” organizations waste $122 million for every $1 billion invested due to poor project performance – a 12 percent increase over last year.

This number is staggering and leads to an important question: How can mature program management practices lead to a competitive advantage?

When establishing a new large-scale, complex IT program or assessing the health of an ongoing program, it’s important to address five key elements. Each is critically important, and if any one of them is not addressed appropriately, risk rises significantly and can lead to outright program failure. Further, most troubled programs made major mistakes right out of the starting blocks. Hence, it’s tremendously important to ensure that a program properly addresses all five areas as it launches.

The first key element is ensuring that a set of mature management processes is used to run the program. There must be an appropriate system development life cycle that lays out the approach or approaches that the organization will use to design, develop, test and deploy the system. For complex IT systems, such as HealthCare.gov, there might be different approaches for the various subsystems.

The second key element is ensuring that there is a solid business architecture supported by a solid technical architecture. There are many failure mechanisms for programs, but it’s surprising how often they fail because there is not a solid high-level business architecture in place early in a program’s life. That absence typically leads to major requirements changes during system development, testing and deployment.

Having a solid technical architecture in place, especially for a complex system with a number of subsystems, is also absolutely critical. If you can “buy” or repurpose subsystems from other systems that meet current requirements, you ought to do so. Buying rather than building lowers risk substantially.

The third key element is that there must be a program governance model in place that recognizes the proper roles and authorities of the important stakeholders. So many programs falter because the stakeholders are pulling the program in different directions. An effective governance structure will drive stakeholder alignment and provide clear and informed decisions to guide the program manager.

The fourth key element is developing the proper relationships with the contractor or contractors supporting the program. Many organizations cannot execute large IT programs without outside support, and those relationships have both formal and informal aspects. The formal aspect is the contract in which the scope of work, terms and incentives are codified. The informal aspect is the management of the contractors via the program management office (PMO).

Look for a program in which the contractors are well integrated and clearly understand their role and the roles of others, and there is open and candid communication among the parties. That type of environment will enable team members to identify issues early, share and discuss innovative ideas, and make informed decisions.

Executing elements one through four successfully, however, is not possible without the fifth key element: a set of skilled and experienced employees leading the program. Although contractor personnel can support a PMO, it is difficult to use them in leadership roles given the need to build strong and trusted partnerships with other stakeholders.

Due to the importance of having a set of skilled and experienced staff to run a program, it is crucial that an IT organization have the culture and make the investment in developing such staff. It is the number one priority for creating a successful IT organization.

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