The Stormy Seas of Information Strategic Planning
In the days of old, companies sought strategic advantages by modifying their ships and searching for new shipping routes, testing the boundaries of the known world. These voyages required a great deal of capital up front to purchase a ship and supplies and to hire and provision a crew; success or failure would be years away. Such a venture was risky. The routes and schedules carefully accounted for the known dangers, avoiding the stormy seas that could run the entire project aground. Although many such voyages ended successfully with riches beyond measure, the sea floor became littered with those who succumbed to the tempest. Even with careful planning a ship could run afoul and founder, resulting in not just loss to the crew but to the backers as well. Unfortunately, many great adventures end in tremendous failure.
Today, the IT manager is often embarking on a similar journey, with similar tragic results.
There are increasing competitive pressures for companies to right-size, down-size, and leverage technology to gain competitive advantage and reduce costs. It is no longer sufficient to be efficient; businesses must continually meet or exceed industry expectations every quarter. In the wired world, information is instantaneous and bad news travels fast. Companies need to be viewed as strategic, particularly IT. Unfortunately, Wall Street is littered with the wrecks and shells of companies sunk by IT projects. IT has proven itself to be a poor navigator of strategic direction.
A McKinsey Global Survey Study in 2014 identified that "IT has become less effective at enabling business goals." CIO's State of the CIO 2016 Survey reported that sixty-percent of functional IT leaders identified that "IT is scapegoated when the other departments missed their targets." IT is perceived as the root cause of the organization's failure. In too many cases, perception is reality.
Nassim Nicholas Taleb coined the term black swan as a metaphor for an event that is unpredicted. Examples of recent 'black swan' IT projects are:
- the Avon "Promise" project that resulted in a one-time write-off of around $100-million and a loss of approximately 16,000 sales reps.
- the Kmart implementation of a $1.4-billion IT modernization effort that did not work to support the existing business model and was too expensive to maintain. Coupled with a $600-million failed software-upgrade project, the company filed for bankruptcy.
- the Levi Strauss implementation of a $5-million ERP system that resulted in a $192.5-million charge-off.
- the US Air Force Expeditionary Combat Support System (ECSS), which was shut down after seven years and billions of dollars in expenditures.
In 2011 a joint study by Oxford University and McKinsey of 5,400 IT projects found that 17% had so massively overrun budget and schedule as to threaten the existence of the company. The Harvard Business Review discovered one in six IT projects to be a 'black swan'. In 1995, the Standish Group performed a study on IT projects and determined that approximately 17% of IT projects could be classified 'fully successful', 52% were classified as 'challenged' in that the project did not meet the budget, quality, or schedule goals, and 30% were sadly 'impaired or failed'.
Standish updated the study in 2012 by examining another 3,555 projects conducted between 2003 and 2012 with labor costs of a minimum in of $10-million, only to discover that successful projects had dropped to a low of 6.4%. 'Challenged' projects now constituted fifty-two percent of these projects, with 'failed' projects increasing to a heart-stopping forty-two percent.
In other words, for large projects, the probability of missing the IT target is ninety-four percent!
IT is regressing in their ability to successfully implement large strategic projects. Rather than improving the organization's competitive edge, these projects threaten their very existence. The IT ship has struck the shoals and the result is the sinking of the entire organization.
Were these project issues truly unpredictable? For many of these failed projects, better understanding of the technology and planning could have avoided these catastrophes. Harvard Business Review found that in over one third of companies IT projects were not aligned with corporate strategy. A major category of IT project failure is "poor or inadequate strategic design and specification." Clearly, IT needs to improve its abilities to predict and control risk, schedule, and budget for strategic projects.
Strategic Information Systems Planning (SISP) is a concept based on two fundamental principles:
- Investment in IT should be aligned with the business strategy, and
- There should be a process involving both business and IT to develop and work toward the strategy.
There are several SISP methodologies, although there is a good chance you either never heard of or used any of them. This lack of knowledge and literature is by itself an indicator of the failure of these methodologies. As explained in the Guide to Enterprise IT Architecture, "The most typical criticism leveled at SISP is its 'point in time' perspective that is not unusual in the strategic planning area — that of 'shelfware'."
The ideal SISP approach should be timely, maintainable, and reproducible; it should be of quality and, most importantly, should be aligned with the business strategy. There are several recognized SISP methodologies that have been around since the 1980s and 1990s, but they have generally not found favor with IT managers.
Business Systems Planning (BSP)
Business Systems Planning (BSP) was developed by IBM Corporation in the mid-1970s. The goal of BSP is to fulfill near- and long-term information strategic needs. It emphasizes data as a corporate resource that must be planned for. BSP also assumes business processes are static; unfortunately, they are not. BSP combines a top-down and bottom-up approach. Two major deficiencies in BSP are:
- its long discovery process (typically greater than one year), and
- inadequate connections between existing and planned systems.
BSP is also costly in time and resources. For these reasons, BSP has fallen out of favor as an SISP technique.
Strategic Data Planning (SDP)
Strategic Data Planning (SDP) was proposed by James Martin. SDP is a bottom-up effort to identify individual systems and a top-down approach to develop an enterprise model as well as create data consistency. This is a finely-granular approach, mapping data to processes and decomposing the processes into functions and activities. A medium-sized firm can expect to track approximately five-thousand attributes. Affinity analysis is performed to identify supergroups, and these supergroups are mapped against the processes.
The difficulty with SDP is performing the top-down and bottom-up analysis simultaneously as well as performing the affinity analysis. SDP can take anywhere from six months or longer and requires training and tools. Again, this methodology is too time-consuming to be used widely by organizations.
Strategic Management Planning (SMP)
Clive Finkelstein proposed Strategic Management Planning (SMP), which is data-driven and based on the principles of Information Engineering. The implementer must accept SMP's assumption that the organization's data changes more slowly than the business processes and that the data-driven approach is more stable than a process-driven approach.
Rather than providing a broad enterprise view like BSP and SDP, SMP provides depth of detail in a narrow area. SMP generates a large volume of work products requiring a CASE tool.
Due to the age of the methodologies and the lack of enthusiasm, none of these SISP methodologies appears to be a useful strategic analysis tool. Is there any concept out there that can guide the organization to improve the alignment with the business without becoming a 'black swan' itself?
Resource Life Cycle Analysis to the rescue! Next month I will present how we put Resource Life Cycle Analysis to work.References
 Naufal Khan and Johnson Skies, "IT Under Pressure: McKinsey Global Survey Results," McKinsey.com, March 2014, retrieved from URL http://www.mckinsey.com/business-functions/business-technology/our-insights/it-under-pressure-mckinsey-global-survey-results
 Dan Muse, "State of the CIO 2016: It's Complicated," CIO, January 2016, retrieved from URL http://www.cio.com/article/3022833/cio-role/state-of-the-cio-2016-its-complicated.html
 Bent Flyvbjerg and Alexander Budzier, "Why Your IT Project May Be Riskier than You Think," Harvard Business Review, September 2011, retrieved from URL https://hbr.org/2011/09/why-your-it-project-may-be-riskier-than-you-think/
 Mark Gibbs, "Why Your Next Big IT Project Is Doomed," CIO, Vol. 16, No. 25 (May 09, 2013), retrieved from URL http://www.cio.com.au/article/461428/why_your_next_big_it_project_doomed/
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