The Last Profit Frontier

After all of the cost cutting, downsizing and outsourcing, there remains one last frontier that has continued to impact profits PROJECTS!

Projects cost too much, take too long and deliver too little. Their poor performance impacts both short and long term profitability. It is time to fix this problem once and for all.

There are now only two types of projects
Totally optimized or sub-optimized.

You have a choice.
The question is: How much money can you afford to lose or waste through project sub-optimization?

Download Chapter 1

Volume 1 - The Profitability of Total Optimization

Preamble

Do these sad stories sound familiar?

A major bank was trying, for the third time, to implement a new internet-based institutional banking service.

The initial implementation was to be the foundation for many other products. The original estimates were 18 months duration, $70m in cost, with a return of $40m in benefits as well as the reestablishment of its competitiveness so that it did not lose major customers and further revenue. It was managed by the organization’s top Program Director. The project staggered over the line in just short of three years at a cost of $185m – implementing a solution that realized less than half of the $40m. Most importantly, the project did not provide a foundation for future planned products (which then had to commission their own, separate projects at additional cost).

A utility was implementing a mandatory project to an unmovable deadline

The project was to automate many transactions and, therefore, allow the reduction of six staff. The project was delivered on the required date, met the required transaction specifications and was only 10% over budget. However, it actually increased the workload in the operational areas because it did not support the transaction exceptions and queries (which had now increased) and it took six months to stabilize the system. Instead of reducing staff, the department had to recruit four additional staff.

A finance company was replacing its 30 year-old systems

These old systems were costing it millions a year to maintain even though much of the functionality had been superseded. The project was abandoned after an expenditure of $44m (of an originally approved budget of $24m). A subsequent project to just ‘front end’ the old system also failed.

An equipment hire company implemented an Enterprise Resource Planning (ERP) system.

The budget was $26m but the delivery cost was $72m — a cost that very nearly put them out of business.

A distribution company spent $24m on a new ERP system

It failed to process standard business transactions when implemented. After huge operational disruption, it was withdrawn after one month and the previous system reinstalled. Later, a new project implemented a replacement system at an additional cost of $52m.

A manufacturing company turned down a quote of $35m for an ERP system implementation

It instead accepted one of $14m. The implementer put on his ‘D’ team and the project crashed 15 months later. The vendor stepped in to rescue the project and delivered it for an additional $43m. By the end, the CEO’s only measure of success was that the project never again appeared on the front page of the financial press!

A bank was implementing a new Human Resources Management System (HRMS)

It employed a top-flight, HRMS-experienced Project Director. The project was cancelled when it had spent $17m of the $12m budget and was found to still be in the ‘requirements definition’ stage.

If you learn some basic principles, you will know why these sale stories occurred and know to ensure your organization never suffers a disaster like these.

Download Chapter 1

Why should a business manager read this book?

Projects are the concern of project specialists, not business managers, right? Wrong!

We want you to learn a new, simpler way of thinking about projects that will put you back in control and enable you to direct projects to create what you need and then lead them till you get the business results you desire.

Every day, for most of our respective careers (41 years for Jed and 34 for Alex), we have worked with senior business managers who focussed on making their business more profitable, more effective and simpler. As we all know, if you are not moving forward, you are going backwards.

During our collective time (which goes back to the IT dinosaur era of punched cards), we have seen projects deliver stunningly successful results for the business and act as a springboard to long-term growth. We have also seen projects which have failed - a few even to the extent of putting the company out of business. Unfortunately, we have seen far more failures rather than successes. 

Every time we are asked to health-check projects, we see business managers frustrated with the results being produced, annoyed at the waste, demoralized at their efforts not being rewarded and uncertain about what can be done to improve things.  The good news is  - it doesn’t have to be this way. 

It is true that occasionally projects may need to be big, complicated and costly. But that shouldn’t prevent a project from delivering what the business needs, values and desires. More importantly, it is possible for every business manager in every organization to learn how to get projects to deliver what is desired, crystalize the value quickly and for a fair cost. Our experience has shown it is possible to deliver totally optimized projects.

This book outlines the models and thinking processes that we have developed over years, honed on projects in organizations of all sizes, capabilities and levels of sophistication across multiple industries and countries. Many organizations  have contributed to the case studies which you see throughout the book. Business managers have critiqued, tested, refined and proven the material and principles, “ironed out the kinks”, and given us feedback on how to make the techniques, tools and processes more practical and useable.

We would love to be able to provide “over the shoulder” guidance and advice to you all but that is not practical. So this book gives you the expert thinking that will allow you to look at projects, see what is really happening and be empowered to make the big decisions right. 

Some of the material in this book will directly conflict with orthodox views about project delivery. That’s our point. Looking at projects from the business perspective creates a very different viewpoint. 

When you adopt these ideas, tools and techniques, your organization can build its capability to deliver Totally Optimized Projects. 

Jed Simms and Alexandra Chapman,

August 2011

Download Chapter 1

The TOP 10 Programs