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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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Becoming the Trusted Advisor

As the world continues to change as does the role of the salesperson. In many ways the transformation of the sales team (and its members) is the most important transformation in any organisation for as we all know “nothing happens until someone sells something”.  In this blog we will be exploring the traits of the Trusted Advisor and why, now more than ever,  they are necessary traits for any professional salesperson.

So what is a Trusted Advisor?  Well the name really does present the answer.  It is a person who is not only trusted by others but is sought out by others for their advice.  The following diagram depicts the Trusted Advisor role in terms of the relationship between personal intent and functional capability (subject matter expertise).

sales roles2

Now we know where a Trusted Advisor sits in the Sales landscape we need to explore the traits that elevate a salesperson to this space.  There is plenty of literature on this topic but if I had to distil all that I have learned about the traits of a Trusted Advisor here is the list I would present;

1. A Trusted Advisor has intent for the long term. To do this the Trusted Advisor will seek an understanding of the prospect / customers strategic objectives as well as their tactical objectives.

2. A Trusted Advisor is a problem solver and is not afraid to lead with ideas.  Trusted Advisors are malleable in their understandings and are just as happy to learn as to teach.

3. Trusted Advisors have an accountable and accessible nature.  They are happy to own their missteps (and those of their team) and work transparently to correct them.  They understand that when conditions are at their worst, they need to be at their best.  They are easy to contact and always return messages.

4. Trusted Advisors bring the required resources to the table to solve problems.  The Trusted Advisor understands that they are not experts at everything and have a strong network of accessible colleagues and technical resources they can call on to help solve their prospect / customers problems.

5. A Trusted Advisor see’s their role as a continuing role with their prospect / customer.  They don’t relax once they have delivered an outcome, they simply move on to the next opportunity.

So why is being a Trusted Advisor so important now?

Well historically a salesperson would be coached to take a ‘Trusted Advisor’ position only for high value solution sales.  This is still the case for these high value solution sales and is as important as it ever has been.  Contrast that with salesperson selling box products.  These salespeople were coached to focus on features and benefits and were not necessary burdened with taking this higher order role with their prospects / customers.  This was a commercial necessity as the box product sales generally had a very low margin level and the cost of sale was very important.  The Trusted Advisor approach to selling is a higher cost approach.  In the past the box product salesperson had one job and that was to make sure the prospect / customer clearly understood their products features and benefits including their “Key Value Proposition”.  Their role was to continue to communicate these messages so when the decision point was reached by the prospect / customer they would ultimately choose their box over all other boxes in the marketplace.

Fast forward to the modern day and we now find ourselves in a world where many buyers are able to educate themselves online.  They can effectively learn about your products features and benefits (including the “Key Value Proposition”) without you. They can research other buyer’s journeys and experiences with your products globally from multiple online networks.  The buyer has effectively made the traditional box product salespersons role redundant.  So what is your role now?

If you are a box product salesperson and you continue to engage the prospect / customer the way you always have you run the risk of losing credibility.  They do not need you to tell them what they already know and if you see that as your job you are missing a huge opportunity.  They are craving a deeper relationship.  This is your opportunity to become the Trusted Advisor.  What is important now is understanding what they are trying to achieve and helping them achieve it with your products and services.

If you are a high value solutions salesperson then you need to continue to act as the Trusted Advisor and exhibit the traits associated with the role.  Hopefully this blog has re-affirmed your commitment to this methodology and motivated you to elevate your sales performance to the next level.

Contribution By:

Lee Bourke

Chief Executive Officer

FileBound Australia Pty Ltd