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Project Management in IT: How Risky is Your Project?

It would seem that in the age of fast-paced technological improvements and facilitated decision-making, projects within IT should become more manageable and carry less risk. After all, today CIOs and project managers have numerous tools at their finger tipsto make project management more efficient and productive.However, many teams still struggle with proper resource management, budget allocation, as well as overall timely project execution. As a result, many employees are overworked, deadlines are not met, projects are placed on hold, and company’s profitability goes down swinging.

That’s why every time a new project is initiated, it’s absolutely crucial for top management to evaluate the risks along with anticipated ROI to make sure that the most profitable requests are being honored in the first place. Regardless of the size, risks are associated with each and every project and they form an essential component of every business decision that is ever going to be made.

The article “Why Your IT Project May Be Riskier Than You Think” in September issue of the Harvard Business Review features a huge pitfall project at Levi Strauss. Levi executives decided to migrate to a single SAP system and hired a team of Deloitte consultants to lead the effort. The risks seemed small, but the challenges started to arise when one of their major customers – Walmart – required that the system interface with its supply chain management system, which posed additional problems. According to HBR, during the switchover, Levi was unable to fill orders and had to close its three U.S. distribution centers for a week. In the second quarter of 2008, the company took a $192.5 million charge against earnings to compensate for the failed project—and its chief information officer, David Bergen, was forced to resign.

With this example in mind, what are some of the common risks that executives may ran into while managing a project? Just a few are outlined below:

  • Lack of prioritization. As it was mentioned above, knowing which projects will yield more revenue is a key to correct project management priority. Prioritization becomes a challenge when CIOs don’t have enough information at their disposal. In order to make a right decision, the following information should be identified: purpose of the project, its alignment with core business strategy, what business needs it will fulfill as well as its impact on the bottom line.
  • Lack of visibility. No matter how big or small your IT group is, sophisticated IT project management tools, such as Innotas, became one of the critical factors contributing to success or failure of any strategic IT project. For example, when your entire PMO is running their projects on shared documents or spreadsheets, the whole process becomes less manageable and error-prone as well as usually lacks its alignment with strategic objectives. Even though such widely available planning tools may seem affordable and inexpensive to use, the effectiveness of work suffers as project managers have to transfer, combine, and reformat the data from multiple documents which often can be time-consuming and less efficient. Read more about why spreadsheets no longer cut it.
  • Lack of contingency planning. Even in a low-risk situation, your projects needs contingency planning. A well thought out analysis of what-if scenarios can end up saving your revenue (and even reputation) on a rainy day. It’s worth noting that contingency plans should be industry specific and tailored to an individual business model of your organization. If Levi had a back-up plan during their system migration project, they would have been better equipped to deal with the crisis.

Assessing the risks associated with your IT projects is not only going to give you a better outlook on your current state of business, but also allow a better decision-making within your IT group. There are many solutions that are available today to assist your team with risk and ROI assessment, so taking advantage of these tools will make your project management execution more effective and timely.

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