Sourcing Shangri-La

The Root Cause Of IT Failures

Next month's HBR has new evidence on the colossal cost of IT failures. It's the largest global study ever of IT change initiatives. And it's not optimistic:

"It will be no surprise if a large, established company fails in the coming years because of an out-of-control IT project. In fact, the data suggest that one or more will."

The study conclusions seem sensible - smaller projects, better risk assessment - but they don't get anywhere near the root cause.  

For a start, even if IT projects were smaller and risks were better managed, there is the bigger problem of 'projectification' - the challenge of managing multiple projects within organizations that are complex, fast-changing and increasingly virtual. 

The HBR report includes data on 'projectification':

61% of managers reported major conflicts between project and line organizations

34% of companies undertook projects that were not aligned with corporate strategy

32% of companies performed redundant work because of unharmonized projects.

All of which points to the underlying issue, the root cause of most IT failures: communication.  More specifically, the lack of a framework for effective collaboration that ensures joined-up thinking across the enterprise. 

This is absolutely not breaking news - Michael Krigsman and others have been hammering on about this for years. But it's still true.

The answer, as leaders such as Cameron have realized, has to be a collaborative framework, with a robust governance wrapper, that sits at the heart of the business. 

It has to use the universal language of end-to-end business process.  It has to be holistic, not just about what's automated.  It has to be integrated, combining process with analytics, risks and controls, documents, quality and compliance. It has to offer different stakeholder perspectives of one process reality, especially to align IT with the business. And it has to support people doing real work, and engage them in continuous improvement.

Implementing a platform of this kind  is not necessarily easy.  Conceptually it's neat and obvious. And yet implementation often meets resistance beyond the normal inertia.

Maybe that's because it's hard to shift a culture to embrace transparency and new levels of visibility and accountability.  But maybe there's an even deeper reason for clinging on to things as they are and rejecting the wider perspective. Projects - even big ones - are quite comfortable places to be. There's a seductive sense of certainty and control. 

We don't want to lose project control of course, but the future must surely lie in coordinating all projects within the wider enterprise perspective. It's the only way that major IT failures, that can cost $m as well as the end of many jobs, can be averted. And major business transformation failures, and major compliance failures, come to that.  

Why Your IT Project May Be Riskier Than You Think - Harvard Business Review, Sept 2011

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Process: How To Break Out Of Binge Culture

"We're about to start another process documentation binge" said the prospective client I was talking with, a shared services director. 

"It's across the business, driven from the center" he went on. "The trouble is that we define the processes but nobody seems to bother about following them.  They're too difficult to understand. So we have a lot of compliance issues."  

Dear Reader, I'm not making this up.  This is a major European energy group.  [I'm even resisting naming and shaming the process tool mandated by the center because this malaise is not unique to this tool - it could any one of the technical process tools.]

I share the story as a brilliant example of the dysfunctional state of so many organizations when it comes to process management.  Stuck in a wasteful and dispiriting 'binge' culture.

At the other end of the spectrum, leaders like Nestlé, Cameron and Carphone Warehouse join up the dots.  They see process as an enterprise asset which underpins risk management and provides one of the keys to sustainable change. They want an enterprise-wide process management platform that gets everyone collaborating effectively on continuous improvement. They aspire to be fluent in end-to-end process.

Which isn't just good for their stockholders: it makes for a much more inspiring place to work.

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Homer's Guide to Risks and Controls

Huge laughs around our kitchen table yesterday evening - about risks and controls. No, really.

Two of our sons are living at home this year, working in temp jobs.  One is in QA for a global biotech company, the other in Procurement for a global food manufacturer.

Both have been given system-wide and global administrator access to their employers' core ERP and document management systems - within a week of starting, which seems pretty amazing.

The biotech company is hilariously obsessive and mechanistic about its risks and controls. [it's easy to see how compliance can chew up 25% of Pharma operating costs]

At the other end of the spectrum is the food manufacturer, which has a risks and controls culture designed by Homer [and we're talking Simpson here, not the Odyssey dude]. 

The risk management person finally realised what my son had sussed on his first day: that he had unrestricted access to the SAP procurement suite for their global operations. So he could invent a supplier, create a PO for any sum and then approve its payment - all without anyone else being involved. 

It was the solution that the risk officer came up with that had us falling off our chairs. This company's global procurement team  works on heroics. Its processes are folklore, an oral history shared at the cigarette breaks. Where there is a process and a rule, it is usually ignored in the interests of 'getting the job done'. (And a high proportion are temp workers, which must be another risk..).

The solution had to fit with how the global procurement team work in practice.  So my son was told yesterday not to use his access for certain SAP transactions.  That would satisfy the audit requirement. 

Instead he has been told to share a communal username and password with four others for those SAP activities.  So the risk mitigation 'solution' rips up the only audit trail that could have proven wrongdoing.  [You couldn't make it up..]

Of course, the CFO of this organization - which is a household name - no doubt sincerely believes that the company's risk and controls are properly managed, and that will be what the auditors are saying as well.

It's an extreme example of the unseen risks faced by organizations that neglect process rigor and so can't connect strategy with reality.  

Hear stories like this and it's easy to believe Gartner's prediction that ten Global 2000 companies will fail or be crippled, due to overlooked but easily detectable process defects - within the next three years.

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How To Avoid Paying For Your Own Processes

Another week, another story of an organization paying per nasum to buy back its own processes.  And create unnecessary new risks on a Finance Transformation project. 

This one is from a presentation yesterday at the Future Finance 2011 conference in London, by the two leaders of a Finance Transformation project at an eye health products company, which we'll call B&L for this purpose. 

The project was to migrate all of B&L's F&A operations to a new outsourcing service provider - WNS. At the start, F&A services were being delivered in-house (in France, Germany and the US) and through Accenture in Bratislava (for six other countries).

With no platform in place to properly manage its end-to-end processes, B&L had allowed Accenture to take ownership.  The F&A processes in the six countries had been transformed since the original 'lift and shift', as you would expect. As one presenter put it: 

"There's no knowledge left in the business. It's all in operations manuals owned by someone else.  After several years, you've lost the knowledge of how your business works. You can't train someone in how your ERP works, or how supplier invoices are dealt with in Italy."

So when it announced termination, B&L had no choice but to negotiate with Accenture to buy back its own processes. 

The amount was undisclosed but, whatever it was, it was only one part of the bill. The speakers stressed that Accenture had been professional throughout - but, naturally, Accenture was very keen to protect what it believed to be its IP - and it had zero interest in helping WNS, the rival to which it had lost this work. Accenture refused to allow WNS staff into its offices, or on to its live systems. And so began a protracted, difficult and no doubt expensive negotiation.

In the end, B&L had to hire space in a separate office block in Bratislava and pay for Accenture people to train WNS staff in a classroom on a test system [and then pay overtime for the Accenture people to day their day jobs in the evening].  Accenture had no interest in helping test that the training for the WNS people had been effective, refusing even to help with test questions.

So the cut-over from Accenture was to WNS staff who had never seen or used the live system.  

In the end, it was a success - not least because of heroic efforts by WNS staff, some of whom at one stage worked for 36 hours without sleep.

"It was incredibly difficult, and exposed our internal weaknesses", conceded the two presenters.

It was also avoidable.  With a process management platform that was holistic, integrated and the real DNA of its business, B&L would never have lost control of its IP.  It would have been able to train its new outsourcer far more effectively.  It would have avoided significant additional costs and reduced its risk.     

[Hats off to B&L and the two presenters by the way for their candor - very refreshing.]

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Now That's What I Call BPM!

Beat this for exec engagement in using process as the language of business transformation. Even better, it's a turn-around where BPM has been the pivot.

This was an $80m SAP project heading for a derailment. The client's SI had configured 'vanilla' SAP without much reference to the business requirements (which had been 'captured' in a Word document).  

So when the SI presented the business with a preview of what its new SAP world would look like, there was panic: the business didn't recognize any of it.

One month later, the client and its SI are using Nimbus Control - delivered as a Cloud service - to describe the end-to-end processes, with Storyboards showing role-based views of typical user activities.  Everyone now speaks the same language.

Now there is shared visibility and understanding: across the client organization, especially between IT and the business, and between the client and its SI. Requirements are rapidly becoming precise. Process improvements are being identified. And the user experience is being transformed so that processes will be integrated with Storyboards, documents, metrics, risks and controls to create a personalized 'intelligent operations manual'. 

The next step is Visualization Workshops to fine tune the design and the SAP configuration requirements.  Then the same Storyboards created for the Visualization Workshops will be used for UAT, training and user support - so there will be no gaps and no overlapping teams re-creating the same thing slightly differently.

But what's really interesting is that both the CEO and and CIO now carry iPads - and not as bling. They use them to pull up the latest versions of the processes and Storyboards in their discussions with the various program stakeholders as they move around the office. 

Nimbus clients such as Carphone Warehouse adopted the iPad early on to support their Lean process excellence people walking the floor.  But hats off to this client: this is the first time that I've come across a CEO and CIO rolling up their sleeves and getting so involved with process in this hands-on way.  

The bottom line is that this client has, in one month, turned an IT-led systems implementation that was heading for disaster into a business-led transformation program that will be enabled by SAP - and with every chance of success. 

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The Process Hall of Shame Re-Opens

It's true that the Process Hall of Shame, which opened its doors just a year ago, has been closed for a while.

I faltered. I was worried that I might identify an organization and cause embarrassment (not to mention litigation!).  And there seemed to be others far more expert than me writing on project failures.  And frankly we're all suffering a bit from failure fatigue.  There are just so many examples where a failure to communicate effectively leads to project failures, cancellations and over-runs.     

I'm inspired though to push open the creaking door, brush the cobwebs off the candelabras - and announce the grand re-opening of the Process Hall of Shame.

Inspired by two things. Firstly by Adam Deane's brilliant description of FDBPM, the 'new mainstream' implementation methodology for process projects. 'Faith-Driven BPM' would be hilarious if it wasn't so on the money.

And then by hearing of a project which almost defies belief.

I hesitate to tell this story because I have some dear friends working in IT who will wince at this. But it's true, and genuinely surprising because it's a throw-back to twentieth century thinking - in an organization large enough that it really ought to know better.        

I have to be careful in disguising this, so I'm not not even going to reveal on which continent this little drama is taking place...

This is an organization that is planning to go live shortly with a major SAP implementation that will transform its business.  Except that it's totally being driven by IT. It's a software implementation, a technical project. 

So some of the details have been overlooked: like what exactly are the end-to-end processes and the business requirements; what are the potential improvements that this project could enable; how the transition will be made between the existing processes and the new processes; and how the operational people will use the new SAP capability in practice.  Admin details, really, you can see how they might easily get neglected in the excitement of the software...   

We have been called in at the eleventh hour by business people aghast at the train wreck they can see about to happen.  They can see only one connection between IT's new SAP system and what their people actually do: the desperate calls that their people will be making to the IT Helpdesk when it goes 'live'.

But what takes the biscuit - and prompts me to throw open the doors of the Process Hall of Shame once more - is the resentful attitude of the IT folks involved, who are, you'll never guess, totally invested in one of the technical BPA tools and see no need to change. 

One of my colleagues was harangued last week by one of the client's IT team, who was keen to point out that Nimbus Control was inappropriate because it isn't designed for data modelling. No, it's designed to enable effective collaboration, right across the business, on operational excellence and continuous improvement. Oh, and to support people in doing real work more efficiently, which might arguably be this organization's bigger priority right now. [And anyway it integrates with SAP Solution Manager, so the IT perspective is well covered.]

Let's have a bit of hush please, ladies and gentlemen, so we can hear the drum roll - and then put your hands together please to welcome this new entrant to the Process Hall of Shame - Ta Dah!

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Whoops! a $50m overspend: Inaugurating the Process Hall of Shame

There seems to be a rapidly growing science in understanding the reasons for IT project failures. And most of us will have seen first-hand some jaw-dropping moments.  

So I hesitate, dear Reader, to lay yet another before you.  But a story shared with me earlier today by an exec involved with a CRM transformation programme at a utility seems a perfect example of how not to implement change - and impels me to found the Process Hall of Shame.

This organisation has adopted a 'multi-sourced vendor' approach to its CRM transformation. No harm in that necessarily. The theory is great: it allows for best of breed capabilities from each vendor - and we all know that having one SI's number to call when things go wrong may not be the comfort blanket that it's sold as.

The organisation's PMO is well-resourced and has some 300+ work packages running to deliver the CRM program, with all the specs and documents and diagrams that you would expect. The PMO has adopted one single process tool [so that's good] but in reality it has only process fragments - mostly just about what is automated.  It has only incomplete views of the end-to-end business processes and, crucially, no single and agreed version of the end-to-end truth.

A strategic review has exposed gaps and unclear requirements that add up to 20+ significant functional gaps, which together will cost an additional $50m+ to deliver because of the accelerated timescales now required to meet the go-live deadline.

As long ago as 2006, Nimbus clients were using Storyboards - which step end users through a business process, and are used for training and ongoing task support - as the basis for UAT for major software implementations by SIs. And the Storyboards themselves were views generated from a single governed process model of the client's business.

It's absolutely basic joined-up thinking.  How can anyone possibly keep the program stakeholders and the SI vendors on the same page without, at the very least, an agreed definition, in the language of the business and owned by the business, of:

• the current end-to-end business processes 
• the future state process model
• the governance framework for managing change.

A quick Google suggests that there are Halls of Shame in almost every walk of life - but not yet one for business process management.  Projects won't feature in the Process Hall of Shame easily - but where a root cause of failure is unarguably the lack of visibility of a single source of truth on the end-to-end business processes then they are IN. And this one qualifies hands-down.