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Poor Project Execution – The Hidden Costs

IT projects are notorious for having a high rate of partial or total failure.  These failures are often born of poor project execution and can lead to any or all of the following outcomes;

  1. Additional resources needed to deliver the project on time.
  2. Additional time to deliver the project with the same resources.
  3. Reduced or modified functionality of the project deliverable.

As well as these troubled outcomes there is also the fatal outcome where nothing gets delivered.  This blog seeks educate on the hidden costs of the poor project execution that lead to these outcomes.

Before exploring the hidden costs lets take a look at the real or understood costs.  In project terms there is a golden rule relating to remediation (rework) costs.  Essentially the cost of remediating a troubled project magnifies exponentially the further into the project you get before identifying the issue.  For example:

Defect Costs

Figure 1: Relative Costs to Fix Software Defects (Source: IBM Systems Sciences Institute)

This table tells us is that if we fail to discover an issue until the project has gone live then we are faced with a cost to remediate that is one hundred times greater than if the issue had been found during design. So lets assume the issue in design cost four project hours to remediate.  Using sixty dollars an hour as our cost base then failure to find an issue until a solution is live could cost us $24 000 to correct.

Now those hard costs are a real problem for an organisation, yet these can often seem insignificant next to the hidden costs of poor project execution.  Lets explore some of the major hidden costs of these poor project deliveries;

Opportunity cost of the project team resources

In most organisations there is a resource bottleneck in relation to high value IT resources.  These resources are rarely idle and generally go from one project to the next as an organisation continues to transform itself or its clients based on the demands of their respective markets.  When a project suffers from poor execution it either delays the current project resources moving to a new project or it draws in resources off another project to help with the remediation.  In either case there is another of the organisations projects that gets delayed or restrained.  It is rare for organisations to factor in the cost of these ‘other project’ delays when assessing the cost of a poor project deliverable.

Opportunity cost of your executives

When a project starts spinning into a troubled state it inevitably drags the organisations executives into it’s wake.  These executives are the ones that need to re-organise and reallocate resources.  They are also responsible for the additional communications and expectation management around the knock-on impacts of the struggling project.  This all takes time and distracts the executives from other tasks.  These other tasks could be revenue in nature or could simply be tasks to ensure the efficient operation of the organisation.  Either way these knock-on effects can become quite costly and are never assessed as costs associated with the rectification of the troubled project.

Opportunity costs associated with sales misdirection [service provider]

If your company is a third party delivering the project for your client then there are a whole extra level of opportunity costs you need to consider over and above the ones detailed already.  The largest of these is the opportunity cost of having your sales arm continue to be involved in a damaged project.  If your sales team are engaged in these post sales activities they reduce the amount of pre-sales activities they can perform and as such there is a direct reduction in revenue.

Future revenue cost of reputational damage. 

Often a troubled project leads to failed customer promises.  These failed promises lead to reputational damage that can impact the organisation to sell its customers products in the future.

Future revenue cost of late delivery

Often an organisation is undertaking a project to enhance a listed product or create a new tailored product for its customers.  Delays to these enhancements or delays to the introduction have a direct revenue implications.  Notably like the previous hidden costs, these are never taken into account when tallying the costs of poor project execution.

As you can see from the above list there are some very compelling reasons whey we should all place a high premium on getting projects executed correctly the fist time around.  Feel free to review the following blogs that deal with the methods for avoiding these poor project outcomes;

Avoid Implementation Issues – The Big Four.

Delivering a Great Requirements Document

At FileBound we would love to hear any thoughts you have around this subject matter.  Have we missed anything / Have you noticed similar outcomes?

Contribution By:

Lee Bourke

Chief Executive Officer

FileBound Australia Pty Ltd

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Document Management – Where to from here.

Document Management has come a long way since Edwin Siebel invented the filing cabinet in the 1800’s.  It has to be said however that innovation in the Document Management space was pretty slow up until the advent of Electronic Document Management Systems (EDMS) in the 1980’s.

EDMS was brilliant because it immediately improved accessibility of the stored documents as well as the timeliness of that access.  As the EDMS vendors continued to innovate they introduced innovative functions such as version control, document locking, annotations and even electronic forms.  At the time this was all very forward thinking and really started to empower organisations and their users.

Move forward to the last 5 years and there has been a lot of the noise in Document Management around the addition of workflow capabilities to Document Management platforms.  This is a match made in heaven as documents are at the core of most organisational processes.  It is a great way of getting an ROI on what was once often considered a cost liability.  I think all the major players in the EDMS pace are now adding workflow (office automation, work management, business process management etc.) functionality to their core offerings (some more successfully than others).

So what of the future?  Where does Document Management go next?  Well here are some of our thoughts at FileBound Australia;

1. Process Tuning

Implementing document based workflows (as mentioned above) has been a tremendous leap forward for organisations.  The next logical step to that is having the ability to performance tune these workflows.  To do this organisations will need to analyse the data created whilst running the processes and look for improvement opportunities.  This will require EDMS vendors to build analytics capabilities into their platforms.  Once this step is taken we could even see the emergence of self-improving workflows where the analytics engine makes assessments and adjusts the work process automatically.

2. Explosion of the electronic form

Essentially e-form engines allow organisations to easily create standard forms and letters.  These documents are the lifeblood of an organisation and represent a significant administrative load (and therefore cost) to all organisations.  Some of the EMDS platforms already deal with e-forms however we believe their use will multiply as more and more processes are automated.  This is due to the fact that e-forms can be used to trigger workflows or created as a critical component of a workflow.  Future EDMS development will revolve around e-form design engines and hosting platforms so that any organisations staff, customers and suppliers can access and use the forms.

3. Mobility

Investment in mobility will continue unabated.  BYOD programs will continue to proliferate and fuel the need for EDMS system to work with multiple mobile platforms.  The mobile platforms have historically been lesser functioned to the core EDMS function and over time this will change so that users can have a richer experience whilst on the move.

4. Cloud

EDMS vendors have been slow off the mark with Cloud.  Most of the EDMS vendors have a client-server legacy and trying to cloud enable that has proven expensive and difficult.  The growth of cloud-native vendors and the changed appetite for Cloud from the buying market will see Cloud delivered EDMS start to and continue to grow aggressively.  One of the biggest influencers in future growth will be the SME market.  Cloud represents an ability for these organisations to access valuable functionality that has traditionally only been afforded by larger organisations.  Small organisations will start to manage their documents and workflows in ways that are similar to larger organisations.

5. Vendor specialisation

AS EDMS platforms have evolved many of them have tried to be all things to all people.  We see tenders in market looking for requirements that span Capture, DMS, Web Content Management, Digital Asset Management, Case Management, Records Management, Knowledge Management, Analytics, Asset Management and Workflow.  Now as we move forward each key vendor will need to determine which of these functions are their core strength.  It is not feasible that a vendor will be able to tick all those boxes and even if they did it is unlikely that they would deliver quality outcomes.  Vendors will need to know what they are good at and the market will need to be better at assessing which of these functions are their priorities for investment.

6. Capture integration

We have already seen some mergers and acquisitions where Capture Vendors buy EDMS assets and visa versa.  Going forward these two groups will continue to merge, partner and tightly integrate.  EDMS players will continue to build capture capabilities into their platform and offer capture capabilities as part of their workflow processing.  These capture capabilities combined with the e-forms engine will allow the document to morph into a container of data that can take many shapes and forms as it moves through its work processes.

These are just some of the trends we see going forward.  We would love to know your thoughts so jump in below.