History is littered with IT application projects that end late, go way over budget, or abandoned altogether. I was fortunate enough to see one work out really well (almost – please read on). It was no mistake. It came down to a simple method advocated by a gentleman named named John Carpenter.
The project was an HR management software conversion from one commercial off-the-shelf software (COTS) package to another. The company concerned was conservative about spending money. A previous business case had proposed a similar project. The problem with that business case was that the benefits were really tough to conceptualize, so the cost/benefit analysis relied on soft benefits like “improved access to information” and “more consistent reporting data”. The folklore was that the CFO had physically thrown that business case out of his office.
Mr. Carpenter’s method was to divide requirements definition and implementation into two distinct projects, with a different business case for each. Under his direction, we wrote a ~1m business case for requirements definition only. We proposed that this first project would result in another business case precisely specifying the schedule, method, cost, and benefits of the implementation project.
According to John, “the approach we used would not be considered a textbook approach for an ERP (enterprise resource planning) implementation. What we did was more of a strategy to address the the CFO’s concerns. The company was very risk-averse so we needed a way to take out as much risk as we could. This was a large project because it involved four major modules affecting the three main areas of HR, and the company wanted to know costs and benefits at each step. Complicating matters, HR business processes and therefore requirements were not clearly understood – the HR department seemed to rely on on the job training rather than documented procedures. So we presented the first phase as an investment into understanding HR processes, as well a precise roadmap for implementation.”
This first business case was accepted by that same CFO and we got started on the 7-month effort. We brought in a consulting team experienced in the proposed COTS package, and followed their lead in requirements definition and prototyping. During the prototyping step they walked HR staff through each relevant function in the software package, detailing how to configure the package for their specific needs and where we’d need to customize it. The result was a definitive, detailed document that showed how the package fit HR process and how it would need to be customized. Then, we used those results to build a business case that included specific configuration, customization, hardware, and software costs, as well as the process and organizational changes that would be required, not to mention the benefits that would accrue. The business case showed substantial improvement, predicting real financial benefits within 4 years. Even better, on a depreciated basis the project literally was almost free, costing only $1,800 in the first year and returning benefits thereafter.
The business case was accepted by the company’s executive committee and the project started. It ran exactly as outlined by the results of the requirements effort, with very few of the nasty surprises often typical of large projects, and it tracked to forecast schedule and budget.
Proving that no good deed goes unpunished, the company, whose core business was real estate, in effect folded in the financial crash of last autumn ’09 , one month from implementation.
At any rate, the lesson I took away from the effort was that dividing requirements and development into separate projects gives business visibility into a project, helps manage financial risk, and enables the project to ground predictions rather than guessing at costs and benefits before they can be known.
The link to the definition of the word “depreciated” was updated after a message from Investopedia.com.