Author: w13jeff

What can you do with $40 Billion dollars? Don’t ask Uncle Sam

Posted on by w13jeff

In a June 12, 2013 article, I read from the Project Management Institute (PMI), it says that in a recent study the government risks $148 million for every $1 billion dollars spent.  This is $13 million more than the private sector.  Mark Langley, PMI President and CEO says there are findings where the government is doing very positive things, but he also goes on saying that just 46% of government organizations understand the value of program management.  He also says that program success rates are declining with just under two-thirds of programs meeting their original goals or intent.

He talks about how both the government and the private sector have work to do in effectively aligning program management with organizational strategy and mission.  He says that more than half of the government respondents acknowledged that they frequently focus on specific departmental objects as opposed to the strategic goals of the organization.  Only 11% of the government organizations have a senior-level program management related role, compared to 22% in the global average.  Only 37% of respondents reported there is a formal process for developing program management competency and only 25% reported having a defined career path for those engaged in program management.  This is 17% lower than the global average.

These are staggering numbers when I read them.  I decided to see what this meant to the taxpayer.  I went to the Federal Reserve Bank of St. Louis to plot what the government has spent over the last few years.

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With the exception of the last 2 years, the government has averaged a 7% increase in spending year over year since 2000 and we spent $3.7 trillion in 2012.  If we just looked at the $13 million more in risk that the government takes over the private sector it adds up to almost $50 billion per year as you can see on the chart below.

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With all the focus on project management and business efficiency, I’m frustrated that the US can’t move forward with this and pave the way for a better run Government.  As the PMI published chart shows below, there are great rewards for a mature project management organization.

Capture

Two things stood out to me in this article.  First, I find it extremely disappointing that project / program management doesn’t align with the overall strategy and that departments are working in silos.  I know this isn’t unique to Government.  Unfortunately, I’ve also experienced this at a few different places and struggle with it today.  Secondly, I don’t know how the government does their budget, but we consider risk when putting our budget together based upon probability and impact.  This means there is less money to use for other projects and programs people want.  I struggle with this topic because we want to ensure we capture all risks of a project, however, it ties up a lot of money from being put into other uses.

How have you or your organization ensured that the projects/programs align with the corporation’s overall strategy?  How have you been able to keep everyone working toward the common goal and not focus on his or her own segment?

How do you plan your budget?  Do you consider risk?  How do you balance appropriate risk with risks that tie up your funds for other projects?

 

This isn’t what we asked for!!! We built it using your requirements!!!

Posted on by w13jeff

I have experienced constant struggles between the business units and IT departments at work.  A businessperson feels they have been very explicit on what they need delivered regarding an IT solution to a business challenge.  The IT person feels they have captured all the relevant business requirements to deliver a great solution to help with business needs.  The solution is implemented and nobody is happy.  What just happened?

Blog

Unfortunately, I have been on both sides of this argument and there is no easy answer.  However, I think there is one constant that can help improve the quality of any IT project.  It starts and ends with relationships.  People have told me that it is all about the process.  “Plan the work and work the plan.”  As with any plan, pressure mounts due to time constraints.  People try to get through tasks to capture requirements, processes, testing approaches and etc.  People talk and share when they trust you and you take an interest in what they are doing.  Not only is it important to build these relationships within the project team, but also outside the project team.  Usually, a project team is asking a person to give more of their time in addition to their current role.  Knowing this, the project team needs to be as efficient as possible when capturing data and knowledge.

 

In the first article, How to Get Down with the IT Guys the author talks about how people with curiosity about the “other side” tend to make greater strides because they ask better questions.  I agree with this as well.  It puts a person in a place to ask why something has to be a certain way and gives people an opportunity to challenge themselves to see if something can be done differently to accomplish the ultimate goal.  In the second article, Building Relationships in Project Management, the author talks about knowing who the stakeholders are and managing their needs and expectations.  When running or working on a project, it is more than managing the tasks and timelines.  You have to manage and lead people.  These relationships are what lead to successful projects.

 

Where I work, the company has made a conscious effort to move business folks into the IT department to help with these relationships and to deliver improved solutions because business requirements are better captured.  In my opinion, the business experience has helped, but the relationships these people have throughout the organization is what is driving the improved success.  People are more comfortable with those they know and can converse with in the same “business language”.

 

I am curious to hear what measures your companies have taken to overcome the barriers between the business and IT departments.  In your experience, are there certain communication practices that work better than others do?  What are some of the processes your company uses to capture business requirements?

Predicting the Future with Business Forecasting

Posted on by w13jeff

Wayne Gretzky said.  “I skate to where the puck is going to be, not where it is.”  This statement not only applies to hockey, but also to the business world.

Our class just completed a Capstone simulation where we competed as companies selling sensors.  It gave us an opportunity to run a corporation by making several business decisions including R&D, HR, Marketing, Operations and Finance.  One lesson I learned is how important forecasting is to a company.  It helps drive some very important decisions.  It impacts on how we calculate our capacity as well as how we want to invest for the year.  We are constantly challenged to keep a positive cash flow.  This is also very true in the real world.  I believe we would have performed better with more accurate forecasting and we did put together a spreadsheet to help us, but it’s more than just data.  Professor Byron Anderson from the University of Wisconsin-Stout said it best.  “If futuring were only based on science, statisticians would be wealthy.”

In an age where Big Data is becoming increasingly important, people continue to struggle with forecasting.  Data as a platform is quickly becoming an industry of its own.  Businesses are being formed around meta-data management, enterprise performance management tools, data warehouse utilities and search engines.  However, people still struggle to accurately forecast.  These tools are great, but they are just tools.  There is a human element that also exists.  During our competition, some of us knew how other teams would react because we know them well.  These decisions can’t be found in a spreadsheet or queried from some place.  We are forced to know our customers and our competition at all times.  This information is invaluable.

  • What’s the size of the market and how fast is it growing?
  • What’s the competition doing?
  • What types of opportunities are there for the company?
  • How much demand will there be?
  • How much money will the company need to borrow?
  • Etc.

John Vanston did some work around forecasting.  He created a model bringing Forecasting, Foresight and Strategy together.  This model gives us a view ranging from heavily quantitative to more qualitative approaches. (Byron C. Anderson 2012)  This helps students understand what is needed to decipher the data around us and I’ve provided a picture of his framework below.

After my recent experience and reading a little more about forecasting, I wonder if there is a need for a required class within the MBA program.  This isn’t a challenge for one particular industry.  It can be applied from manufacturing to finance to sports (as evident with the recent movie Moneyball).  I believe forecasting is more than just numbers.  It’s an art.  Who’s making decisions and why are they making these decisions are just as important.  In a constant world of pressure for margin, having accurate forecasts could mean the difference between staying in business or not.

What are your thoughts about forecasting as a mandatory course for MBA students?

What experiences (Good / Bad) have you encountered at work with forecasting?

References:

How Corporate Strategy May Ruin Your Holidays

Posted on by w13jeff

In a book I have recently read, Strategy is defined as positioning an organization for competitive advantage.  It involves making choices about which industries to participate in, what products and services to offer and how to allocate corporate resources. 1  As with any good strategy, there is a need for flexibility to react to a market and / or the competitors.  A corporation is constantly learning about their position and adjusting to maintain a competitive advantage.  This is never more apparent than in the retail industry today.

Black Friday has become almost a holiday in its own right.  It is the day after Thanksgiving, which is thought to be the busiest shopping day of the year and the beginning of the holiday shopping season.  There are several theories about why it’s called ‘Black Friday’, but the most common in the retail industry is due to retailers running at a loss (red) until Thanksgiving when they start taking in a profit (black).  Traditionally, retail has strictly been brick and mortar stores.  In 2005 companies started becoming a little more aggressive with their deals hitting the market place the day after Thanksgiving.  The past few years a new channel has opened competition even more where people are shopping online.

Last year we started seeing a couple different strategies with retailers offering door buster deals and opening earlier on Thanksgiving.  However, this year there is definitely more strategy involved with companies taking different approaches.  For example, Foot Locker is not discounting goods.  It is releasing a hot new shoe at the regular price and keeping their other products at regular price as well.  Target is not discounting goods but is offering a line of luxury items no other retailer is carrying.  Wal-Mart opened its stores 2 hours earlier this year and is trying to balance its promotions between the store and its online customers.  They are trying to drive more customers to Walmart.com without affecting the stores.  Lastly, Amazon is offering free shipping for any goods bought on their website.2  These are all examples of companies changing their strategy and combating their competitors.

I just read an article stating top online retailers have sales up 28.4% over last year.  Last year’s holiday online retail sales were approximately $67 billion and this year they may reach $79 billion.4  Not only is this huge growth, but it shows that retailers need to change with the times or they will find themselves out of business.  The other amazing stat is PayPal had almost a 200% volume increase in mobile payments. 4  This is telling me people are in the stores with their mobile devices and purchasing online.  Brick and mortar operations cannot survive this consumer behavior.  What does it mean to retail, as we know it?  I am not sure.  However, I am certain it is changing and companies will have to change with it.

I found these articles interesting for a couple of different reasons.  First, we are identifying a strategy as part of a project in class.  It makes you realize we need flexibility within that strategy to be successful.  What we are experiencing with our shopping habits proves this extremely vital to success and survival.  The second reason I find these articles interesting is because at work, I deal with payment methods and there is a lot of talk about mobile payments.  Some believe it is the future while others believe it is not.  There is a very interesting article below regarding PayPal discussing this very topic.  We have not made a decision at work yet, but it is good to have some options ready in the event we have to change our strategy.

References

  1. Cornelis A. de Kluyver & John A. Pearce II “Strategy: A view From the Top” Pearson Education 2012
  2. Will Retailers’ Black Friday Strategies Work?
    http://professional.wsj.com/article/SB10001424127887323622904578129544038176924.html?KEYWORDS=youtube+strategy&mg=reno64-wsj
  3. If You Want to Beat ‘Em. Learn From ‘Em First
    http://professional.wsj.com/article/SB10001424052702303734204577464503619605954.html?mod=WSJ_SmallBusiness_LEFTTopStories&mg=reno-wsj
  4. Sales soar on Cyber Monday ; Business at top retailers up 26.6%
    http://professional.wsj.com/article/TPUSAT000020121127e8br0000c.html
  5. PayPal Works to Take Its Business Offline
    http://professional.wsj.com/article/SB10001424127887324595904578117212801486972.html?KEYWORDS=paypal&mg=reno64-wsj