Strategic Planning and Risk Reduction

"From Expectation To Achievement"
By Norm Raffish, CPIM

Summary:

Most major enterprise projects have an inherent risk factor attached to them because they tend to be complex and affect critical processes and structures within the organization. One of the main reasons why many projects fail to reach their objectives, or just plain fail, is because there never was any significant planning at the front-end that took into consideration these risks.

The concept of "project assurance" is almost a literal one. By forcing the organization to go through this strategy planning and validation process, you are taking out an insurance policy on the project. That policy cannot guarantee that there will not be any surprises or difficulties. What it will do is significantly reduce the risk that many of those surprises and difficulties will happen. And even when they happen, you will have mechanisms and tools in place to rapidly address the issues.

This ACA Group article will explain how to reduce your risk of failure with major enterprise projects:

Removing significant risk from enterprise solution investments permits companies to achieve the economic advantage they expect to gain from those investments is the bottom line. In order to realize that goal, we have developed an industry independent methodology called Project Assurance, or PAss, to assist our clients in this effort. And since enterprise solutions are critical to a company's competitiveness and growth, this area requires significant "planned success."

The most common enterprise solution that organizations invest in is in information systems, such as supply-chain, human resources and financial application suites. Other enterprise solution investments that have similar major impacts on an organization include: business process improvement, product introduction, and activity-based management. These investments have a strategic effect on the business, and therefore, significant risk reduction becomes an essential step to success.

We believe that through an integrative process of identification, validation, selection, and monitoring, almost any organization can significantly reduce the risk of failure or low return. Through many years of business process and implementation experience, we have been involved in many successful projects. Yet, over the past 20 years, articles abound questioning why have there been so many enterprise investments that have failed to reach their potential. It turns out that there are only a few basic reasons, and they are common to most projects.

At the outset it should be said that while some projects showed poor results because the wrong personnel were engaged, this proves to be a rather small number. The five primary reasons that enterprise solution investments failed to reach their anticipated payback are:

1. The original investment was evaluated based on incomplete or inaccurate assumptions.

2. The selection process was conducted substantially on subjective criteria and was not objectively validated.

3. The implementation strategy was disconnected from the acquisition and selection criteria leading to unexpected and often undesired, results.

4. The impact of the proposed investment on the organization was not properly evaluated or even understood.

5. The quality oversight function was not proactive, or not empowered to initiate timely corrective action programs.

While these reasons may not be a revelation to many, the fact is that they persist in some form or another on almost any major enterprise project. There are other accepted reasons to be sure; lack of resources, "scope creep", overly ambitious commitments, and inadequate user training, are among those often cited. However, these, and most other related issues, stem from a common source. That is, the original process was flawed because it was conducted without full knowledge or disclosure, and abetted by a lack of an integrated decision making process.

To combat these pitfalls, we have developed a unique methodology, Project Assurance (PAss), which identifies the high risk areas, and offers guidance and support in reducing or eliminating these risks. PAss has five components. These are linked together to guide our clients through strategy, validation, assessment, planning, and oversight. Our mission is not to take over the project or the process. To the contrary, it is to provide our clients with the tools and guidance to manage their own enterprise solutions with a far higher prospect of realizing their investment objectives.

PAss is designed to help put your goals safely within reach through these five components:

1. The Management Planning Workshop - A session that works to define exactly what the proposed investment is about, its scope, and why it is important to your organization (1 day)

2. The Investment Payback Model - A process that identifies the alternatives, sources of the anticipated payback from the proposed investment, and who within the organization is responsible for his or her part of the payback (1 to 2 days)

3. The Enterprise Design Solution Workshop - A step-by-step workshop to define the implementation strategy and plan for realizing the investment's objectives (3 to 4 days)

4. Project Impact Analysis - A series of exercises that define and plan for which organizational practices and functions will be impacted by the new enterprise solution, and distills down the mitigating responses (2 to 5 days)

5. Project Milestone Acceptance - A process that assess if the implementation project is on track, and if not, how to get it back on course (5 to 10 days, based on the complexity of the project and number of milestones)

PAss will put your organization in a position to realistically and aggressively pursue your investment objectives with a significantly reduced level of risk. However, we always recognize that in the final analysis nothing replaces good management.

Contact: Norm Raffish at nr@theacagroup.com