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The CFO and IT

The CFO and IT

IT projects are similar to most large capital investment projects, they must be aligned to the company strategy and deliver value to the business.

IT projects are failing at an alarming rate; the general consensus is that 25 percent of projects fail, 25 percent succeed and 50 percent fall somewhere in the middle. What is your organisation’s IT budget? New Zealand’s spend on IT goods and services (not including internal labour and so on) is $6.4 billion. Scary huh? You may not have heard about the scale of these failures as it isn’t really in anyone’s best interest to declare them, but they are there, just ask anyone on a project team, or check what each projects planned dollar benefit is then compare it to the actual dollar benefit, a few years after delivery, if the measures are there. It is not pretty.

An IT project often has a large initial cost, which is typically justified by a return on investment. This is not about shaving off more cost, but ensuring that the return is delivered and profit is added to an organisation, not subtracted due to failures.

Henry Ford was a believer in checking his cars at the beginning and then all the way along the production process, not just at the end. The same should be done with IT projects. If a project does get agreement to start, don’t then just check it at the end. Ensure that care and quality are applied all the way along its life and after it has been delivered to the customer.

Finance, sales, marketing and core business operations have been around for a very long time and are well established disciplines with tried and tested methods, but with IT, we would be lucky if it has been with us for more than 50 years and it is complicated! To illustrate, please let me ask you how your calculator computes two numbers within its small computer chip, what are the electronic paths and transactions that take place? – and that’s just a calculator! These disciplines and methods in IT are growing and stabilising, but on a complicated topic. The disciplines in IT need to be fostered to reduce failures.

IT is usually lumped under the CFO’s remit, so now not only does the CFO need to know their own discipline but now have to manage IT (and often parts of the others) as well. Due to the complexity, it is difficult for CFOs to know where to start. Using a structured approach, IT can be made visible and projects delivered successfully.

IT projects are similar to most large capital investment projects, they must be aligned to the company strategy and deliver value to the business. They must be given support and management from the start to end. Using already established methods, the CFO can ensure that the project increases its chance of success. These things are not rocket science, but often one or more of these methods are missed or done poorly causing failure:

Governance - specify the decision rights and accountability framework to encourage desirable behaviour in the use of IT

Project Management Office – define and maintain standards and processes related to project management.

Project Management - keeping a project on track is key. All components of project management are important and missing one could trip you up.

Business Analysis – understand and document what the customer requirements are. This is often a major contributor to failures.

Architecture – make sure that what your build fits in your landscape and is going to integrate, work well, and last.

Development – use quality builders to build a quality product.

Test – testing is often neglected. Due to IT’s complexity, there will be bugs – catch them before the customer does.

Keep your hardware up to date.

It is likely that your maturity level around these methods is low and this can be increased by being aware of these, then growing the maturity of each of them.

And from a general perspective, here are key areas to consider: Keep projects small (three to six months) by breaking projects up. And lastly, IT projects are complex, so treat them with respect.

The author is the managing director of Seâd Project People and has more than 20 years experience in the IT industry in New Zealand and the UK. He has witnessed a large number of project failures and became very concerned about the direct impact to each company and the greater impact to the New Zealand economy. He started the website Getting IT Right that provides a forum to discuss and refine issues around project management. Reach him at scott@sead.co.nz.

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