Re-baselining of IT projects – Factors that makes it difficult and some recommendations to address them
Before addressing the question, it would be beneficial if we understand what baselining and re-baselining is. Baselining is the common project management method where we lay down the cost and effort estimates and schedules based on assumptions that we have at hand. Once baseline is created, project plan is laid out based on this baseline. But as projects go ahead, due changes in assumptions, project requirements, due to poor project oversight and other changes, the original cost / effort estimates and schedule does not fall good and calls for modification of the same based on new assumptions. If projects are not re-baselined at this stage, they fail drastically and / or lead to huge cost overrun.
Federal IT projects are not different. The situation is more obvious due to outdated (quickly changing) technology, complex systems, processes & systems, poor project estimation/planning/control mechanisms and lack of expertise to push and pull clean project management practices that leads to weak risk / change management and over and above all – politics. These situations that lead to re-baselining further determine the factors that in turn make it difficult to re-baseline federal IT projects, which include –
1. Need for re-estimation and arriving at revised cost estimation based on detailed work breakdown structureThis is one of the major factors that make re-baselining difficult task and time consuming to get on track especially when agency is dealing with multi-billion projects which are too complex to start with. Greatest concern is to make all assumptions clear and realistic so that re-baselining is avoided in future. Immediate remedial action would be to spend considerable time to figure out what the actual need is and clearly define what individual components of work / task need to be executed to achieve the task. Expert advice should be sought for each major task to determine closest cost, effort and time.
2. Need for re-work on EVM formulas and calculation to adjust new cost and valueEarned Value Management (EVM) is the most widely used and federal standard to measure performance of an IT investment. Re-baselining causes the project team / agency to rebuild EVM formulas based on new cost, effort and value and this involves considerable cost, effort and risk management to ensure that the expected ROI is attained within reasonable time period for changed scenario. Once we arrive at clear work break down structure and have a clear idea of how work / task need to be executed and integrated to achieve the clear goal, EVM analysis and establishment should not be a problem.
3. Lack of credibility on the part of agency to have this oversight and take the responsibility to fix issues and propose the business case for re-baseliningThis issue would keep the agencies from announcing the fact that they have actually overrun the budget and are in grave need to rebaseline. The memorandum from CIO and OMB director urges agencies to announce for help and declare that they need to re-baseline based on an investment’s poor performance. OMB need to ensure that it provides appropriate support for the agencies and that it gives them a chance to correct any issues that would have lead to re-baseline. OMB need to clearly define the expectations that it needs to have in a re-baseline plan and to monitor its progress.
Bibliography
1. usaspending.gov (2010). Federal IT Dashboard. Retrieved on 02nd November from http://it.usaspending.gov/
2. os.doc.gov (2010). US. DoC, Office of CIO – IT Investment Performance Management Policy. Retrieved on 02nd November from http://ocio.os.doc.gov/ITPolicyandPrograms/Policy___Standards/PROD01_004949
3. Whitehouse.gov (2010). Reforming the Federal Government’s Efforts to Manage Information Technology Projects. Retrieved on 02nd November from http://www.whitehouse.gov//sites/default/files/omb/assets/memoranda_2010/m_10-25.pdf
4. Whitehouse.gov (2010). Information Technology Investment Baseline Management Policy. Retrieved on 02nd November from http://www.whitehouse.gov//sites/default/files/omb/assets/memoranda_2010/m10-27.pdf
5. Whitehouse.gov (2010). Immediate Review of Financial Systems IT Projects. Retrieved on 02nd November from http://www.whitehouse.gov//sites/default/files/omb/assets/memoranda_2010/m-10-26.pdf
6. Whitehouse.gov (2010). Sharing Data While Protecting Privacy. Retrieved on 02nd November from http://www.whitehouse.gov/sites/default/files/omb/memoranda/2011/m11-02.pdf
7. Whitehouse.gov (2010). Pilot Projects for the Partnership Fund for Program Integrity Innovation. Retrieved on 02nd November from http://www.whitehouse.gov/sites/default/files/omb/memoranda/2011/m11-01.pdf
Article copyright (c) 2010 – 2020 – Deepesh Joseph (deepeshjoseph@yahoo.com)
Categories: Business and Management, E-Governance, Enterprise Architecture, Finance Management, Information Architecture, Information Management, Knowledge Management, Process Improvement, Reengineering Tags:
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Is there a more effective strategy for helping developing countries increase the computer and information literacy of their children?
Intel’s Maloney’s words – “It’s about the Web more than anything. I have young kids …….. doesn’t have access to the Web is overwhelming” – is very striking. OLPC efforts might be an answer to this concern. Strategy and plan alone doesn’t work when we are talking about reforming developing nations, cost effective infrastructure is also important. I would suggest that manufacturing information processing devices such as the XO should be done to reduce the TCO as low as possible.
OLPC website at http://www.laptop.org/en/laptop/ describes the OLPC efforts in detail, their mission, vision and even hardware, software specs. The cool part that I liked is that they are using Open source tools and solutions to build the system. This will open up new realms to introduce and support Linux based Open-source systems into schools and other educational institutions which are looking for cost effective methods of increasing the computer and information literacy of the students.
Article copyright (c) 2010 – 2020 – Deepesh Joseph (deepeshjoseph@yahoo.com)
Get all articles from www.getallarticles.com. Be informed and gain knowledge. Good resource for research and reviews.
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Applying NPV, ROI – An example to guide IT strategist to evaluate IT investments
Case Study:
Opportunity A: Your bank is looking at an optical character recognition (OCR) system to further automate the check processing function. Check processing is a time sensitive function. If outgoing checks miss daily clearing deadlines, the bank looses use of the money for one day. Since your bank clears over one million checks per day, this can be a substantial amount. The current system, based on magnetic ink character recognition (MICR) is reliable, but labor intensive. It requires large numbers of relatively low-level employees to encode each check with magnetic ink. The cost of this process is very high and scheduling the right number of people to meet fluctuating volumes is challenging.
The initial investment for the OCR systems is estimated to be $1,250,000 for hardware, $450,000 for packaged software, $300,000 for customized modifications to the software, and $200,000 for training. Additional ongoing costs over a five (5) year system life are estimated to be: Hardware Maintenance: ($200,000 per year for 5 years); Software Maintenance: ($250,000; $200,000; $175,000; $200,000; $175,000); Supplies: ($200,000 per year for 5 years). Benefits over the five-year system life are estimated to be: Salary Reductions due to Staff Cuts: ($1,000,000; $1,100,000; $1,200,000; $1,300,000; $1,400,000); Increased Revenue Due to Faster Check Collection: ($450,000 per year for each of the 5 years).
Opportunity B: Your bank is looking at installing a new credit card processing system to
replace your aging mainframe system. Not only would the new system be less expensive to operate, but also there appears to be an opportunity to sell processing services to other banks that are looking to outsource this function. Your analysis of the credit card market suggests that there will be a continuing concentration in the industry as many small banks sell their portfolios to larger companies. You feel that a modern credit card processing system is essential if you are to compete effectively in this market.
The initial investment for this credit card system is estimated to be: $1,250,000 for initial software licenses; $200,000 for customization of software; and $250,000 for training. Ongoing costs over a 5 year life are estimated to be: License maintenance fees: ($110,000 per year for 5 years) and Software maintenance: ($550,000; $600,000; $650,000; $650,000; $700,000). Benefits over the 5 year system life are estimated to be: Salary Reductions due to staff cuts: ($450,000; $500,000; $550,000; $600,000; $650,000) and New Revenues from Outsource customers: ($400,000, $450,000, $600,000, $700,000, $3,500,000).
Which alternative will you present to the IT Steering Committee and why?
::Analysis::
Background
Under strict project constraints, we need to choose the best alternative between Option A and Option B. The current hurdle rate is 10%. Sections 1.1 and 1.2 details the cost benefit analysis matrix for option A and option B respectively. In section 1.3, we analyze the results and consider three major non-financial factors to finally arrive at the best alternative.
1.1 Cost Benefit Analysis :: Option A
1.2 Cost Benefit Analysis :: Option B
1.3 Justification for the right alternative
Looking at the ROI, option B seems to be appealing. But there is not much difference in the ROI of the two options and both exceeds the hurdle rate. Given such a scenario, we need to really take into consideration other factors such as project risks for each option, employee resistance and ability of each option to resolve current issues.
(a) Project Risk
Option B involves replacing the current mainframe based systems with the new system. The inherent risks involved in this whole process are gaining full management support for migrating systems from the well established and accepted mainframe systems, data migration issues and additional costs associated to data migration which is not counted in the assessment .
. Option A on the hand will not raise much risk as Option B as it is an addon feature to the existing system which is cumbersome and time-consuming. So, considering project risks, Option A is the best choice.
(b) Employee resistance
Both option A and B will introduce a certain amount of employee resistance to accept the new technology. Fear of losing jobs will be a major reason for resistance for Option A, mainly from the check processing staff. As the benefits assessment shows, there is expectation of huge saving from staff cuts. Option B also faces resistance, mainly from the IT department, in getting rid of the mainframe systems and thus, their competence in that area. Through appropriate training and awareness and employee involvement in the migration process, the resistance can be mitigated to a great extend. Option B seems to be favorable in this regard.
c) Ability to solve current issues
The main reason for implementing option A is to reduce the huge time that is wasted in processing checks using the magnetic ink reading method. If company continues with the current technology, huge loss is predicted due to inability to clear daily checks. So, implementing Option A is of high priority, given the current situation, to realize huge gains in terms of faster processing of checks. Option B on the other hand, even though it brings in faster processing time and other benefits in terms of automatic credit card processing, it is not necessary to avoid any current financial loss.
Thus, considering the least project risk factors and the ability to resolve current issues which has great financial implications, Option A is the best alternative to work on.
Analysis Copyright – Deepesh Joseph – (2002 – 2020)
Categories: Business and Management, Finance Management, Information Management, Money Management, Strategic Planning Tags:
Preparing Marketing Plans – Sample one for Amazon.com – A handy tool for strategic IT managers
Overview
Amazon.com offers Earth’s largest selection of online products. Being the #1 online retailer, it offers the most advanced and innovative ways of e-commerce that is capable to continuously deliver fastest, reliable, cheapest and most user-friendly online shopping experience for the customer.
Marketing Strategy Focus and Market Segments
Company’s mission is to become extremely customer-centric where customers can come and discover anything they want to buy online at lowest possible prices (Business Wire, 2007, April 24). The strategic focus of the company that can influence its marketing plan will thus be improving customer satisfaction via better customer-service, easily navigable website with greater focus on personalized services and learning customer behavior, expanding its international market to increase its customer base and thus annual revenues, expanding its affiliates program to increase web-site traffic and continuing to work on alliances to expand its product line to become a one-stop online retail store.
Amazon.com’s market segments are consumer-centric and are categorized based on geography, demography and customer behavior. Geography based market include the North American market and the international market. Demography based market segments targets income levels, age and sex. Behavior based market segments include existing customer bases with varied buying or selling characteristics. The key issues faced related to market segmentation are fluctuations in foreign exchange rates, global trade regulations and economic conditions, changing consumer tastes and demands, adapting the personalization services to new behavioral patterns and product expansion.
Marketing Mix – The 4 P’s
Product: Amazon.com’s product line falls under 3 broad categories – Media, Electronics and Other General Merchandise, and Others. Media includes books, DVD rentals, music etc. Electronics and Other General Merchandise includes all electronic items, toys, apparel, kitchen and house-wares, health care etc. Others includes mainly co-branded credit card programs.
Place: Company concentrates on fully online business where products will be displayed and sold directly via company’s global website versions (country specific) or through affiliates.
Price: For retaining its vast customer base, company applies Penetration pricing strategy offering lowest price possible for high quality products and services. Promotion: Company’s major mass-promotional medium will be internet itself via affiliate programs, gift cards, promotion codes and strategic alliances for cross sector product selling via partner websites, . The company can look forward to establishing a general purpose email service, similar to Yahoo! Mail and use it as a medium for advertisement.
Measuring customer satisfaction
Realization of Amazon.com’s marketing strategy and its success in e-commerce business depends on its ability to satisfy and retain its vast customer base. The question that needs to be asked is – Does the current product offerings, price, customer service and website content, search and ease of use imparts the expected value to the customer. Collecting and analyzing external satisfaction data can be successfully used to measure customer satisfaction in this case since the customer need to be heard directly in order to improve the current services. Quantitative techniques such as customer surveys, questionnaires, customer reviews and ratings and customer personalization data collected from the customer behavior on the website, can be used to measure whether the marketing goals are met.
Article Copyright – Deepesh Joseph (2002-2020)
References:
1. Business Wire. (2007, April 24). Amazon.com Announces First Quarter Sales Surpass $3 Billion, up 32% Year over Year — Operating Profit Grows 38% — Raises Financial Guidance. Amzn Investor Relations. Retrieved May 6, 2007, from http://phx.corporateir.net/phoenix.zhtml?c=97664&p=irol-newsArticle&ID=989711&highlight=
2. Mattern J. (2007, Feb 8). One Page Marketing Plan Template. Retrieved May 6, 2007, from http://marketing-plans.suite101.com/article.cfm/one_page_marketing_plan_template
3. Public Affairs, UIUC. (n.d.). Marketing Plan Summary: Developing marketing plans. Retrieved May 6, 2007, from http://publicaffairs.uiuc.edu/marketing/summary.pdf
4. BusinessVictoria. (n.d.). Sample Marketing Plan. Retrieved May 6, 2007, from http://www.business.vic.gov.au/busvicwr/_assets/main/lib60016/marketing%20plan%20final.rtf
5. BusniessLink. (n.d.). Marketing plan summary and introduction: Write a Marketing Plan. Retrieved May 6, 2007, from http://www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES&itemId=1075313149
6. MoreBusiness.com. (2007, May, 5). Sample Marketing Plan: AMT. Retrieved May 6, 2007, from http://www.morebusiness.com/templates_worksheets/bplans/printpre.brc
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Assets and Liabilities for an organization – Yes basic stuff for anything including IT strategic planning
Assets and liabilities are the two major entities that find an entry in a business’s balance sheet for measuring its wealth. Assets are items owned by the business firm that have certain monetary value and will result in future benefits in the form of service and and/or cash flows. Two common assets are accounts receivable and business property. Accounts receivable is an example for current asset which indicates the money owed to the business by its customers. Business Property is an example for fixed asset which indicates the physical property that houses the plant, equipment and other resources required to operate.
Liabilities are the amount owed by the business to its creditors. Accounts Payable and Mortgages and loans are two common examples for liabilities. Accounts Payable is the money generated from purchases which are bought on credit. Mortgages and loans are long-term liabilities which require business to pay fixed amount of money over stipulated periods, usually more than a year.
Article Copyright – Deepesh Joseph (2003-2020)
Research Reference:
1. Williams C. (2007). Management (4th ed., ). Thomson South Western.
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