Programme offices cut IT project failures

56% enterprises suffered a failed IT project last year, according to KPMG International. However, companies with mature programme office (PO) to suffered a failure rate of just 2%.

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By  Matthew Southwell Published  January 29, 2003

I|~||~||~|56% enterprises suffered a failed IT project last year, according to KPMG International, with the average failure costing US$12.9 million. However, companies that had a mature programme office (PO) to coordinate projects suffered a failure rate of just 2%.

The need for a PO to oversee all IT projects is increasing because of the huge number of projects that a company may be implementing. A large insurance company, for instance, could easily be doing 1000 project simultaneously. The PO sits above this, ensuring that the projects fit together coherently and that they are in line with the company’s overall business plan.

“Large organisations often run multiple business transformation and IT projects at any one time. A central programme management office is then pivotal to ensuring the effective co-ordination, quality assurance, risk management and reporting of all the programmes underway,” explains Bryan Cruickshank, KPMG’s UK head of information risk management.

A PO achieves this through a two-tier approach to projects. The office first reviews proposed projects to ensure that they are truly aligned with the business needs of the organisation. If not, it will then advise that the project needs to be scrapped or redesigned.

“Successful projects are very often the ones that are well aligned with business goals. IT projects innovated by IT departments usually fall into crisis,” says Abdel-Hamid Khafagy, manager, software group services & Mindspan solutions, Middle East, Egypt, Pakistan, North & West Africa region, IBM.

To fulfil this function, the PO needs to be separate from the IT department and instead report directly to the CEO. That way it will be able to take an independent view of a proposed project and ensure that it does meet a true business need rather just an IT need. “All companies need to think about ‘business projects’ rather than ‘IT projects’,” says Mihir Chatterjee, Bahrain information risk manager, KPMG.

Once a project has been approved, the PO then helps in the implementation by providing project management resources, for instance. The office also plays a monitoring role, so that it can identify which of a company’s hundreds of projects are in trouble.

“What you are looking for are the projects that are really going to hurt you by going over time or over budget,” says Lorcan Malone, EDS’ Gulf states business development manager.

Despite the success of POs, they have yet to be fully adopted in either the Middle East or the rest of the World. 10% of the organisations in the KPMG survey had no PO at all, and only 9% of those that did were considered to be fully mature and successful. The key factor in assessing maturity was having an overview of all on-going projects followed by embedded project processes, standards and methodologies.

These projects standards and metrics are beginning to be adopted in the Middle East, as they provide a good way of both planning projects and measuring success. However, many regional organisations still fail to use them, which means that projects can endlessly drift or that unrealistic timeline are proposed. “The dates are [often] based on factors that have nothing to do with the project,” complains Chatterjee.

The standardisation of metrics and a project methodology within an organisation is therefore an important boost to project delivery levels. A programme office provides a central point for this process, as well as ensuring that the methodology is adhered to as the project progresses.

“For big organisations that want to control exactly what’s happening in IT and want to get the best value for their IT spend some kind of programme office is required,” says Malone.

“[The PO] ensures that before money is spent on a new programme that it [the project] fits into the overall scheme of things and that definitely makes sense,” he concludes.||**||

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