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Recent Developments in Recent Developments in Information Technology Information Technology

(IT) Project Management(IT) Project Management

Kathy Schwalbe, Ph.D., PMPKathy Schwalbe, Ph.D., PMPAssociate Professor, Dept. of Business Associate Professor, Dept. of Business

Administration, Augsburg CollegeAdministration, Augsburg CollegeDecember 4, 2002December 4, 2002

schwalbe@augsburg.eduschwalbe@augsburg.eduwww.kathyschwalbe.comwww.kathyschwalbe.com

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Personal BackgroundPersonal Background• B.S. in math, 1981 (before Notre Dame and B.S. in math, 1981 (before Notre Dame and

most colleges offered computer science or most colleges offered computer science or MIS degrees), MBA in 1986, Ph.D. in MIS degrees), MBA in 1986, Ph.D. in education in 1996education in 1996

• First job was as a project manager in the Air First job was as a project manager in the Air Force working on advanced communications Force working on advanced communications systemssystems

• Worked on many projects to develop and Worked on many projects to develop and install several types of systems install several types of systems

• Now enjoy teaching, writing, and mentoring Now enjoy teaching, writing, and mentoring othersothers

• Personality profile: ENTJ, driver, high need Personality profile: ENTJ, driver, high need for achievementfor achievement

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Presentation OverviewPresentation Overview

• Update on project management (PM) Update on project management (PM) and progress in managing IT projectsand progress in managing IT projects

• Key findings from recent PM research Key findings from recent PM research • New developments in software to New developments in software to

help manage projectshelp manage projects• Personal views on what’s changing Personal views on what’s changing

and what needs to changeand what needs to change• Suggested referencesSuggested references

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Recent FactsRecent FactsAbout Project About Project Management*Management*• The Project Management Institute The Project Management Institute

(PMI) estimates that (PMI) estimates that 4.5 million4.5 million people in the U.S. (3.3% of the people in the U.S. (3.3% of the workforce) and over 12 million people workforce) and over 12 million people in the rest of the world regard project in the rest of the world regard project management as their profession of management as their profession of choicechoice

• The U.S. spends over The U.S. spends over $2.3 trillion$2.3 trillion on on projects every year, or projects every year, or one quarterone quarter of of the nation’s gross domestic productthe nation’s gross domestic product

*The PMI Project Management Fact Book, Second Edition, PMI, 2001

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Certification UpdatesCertification Updates• Number of PMPs Number of PMPs

continues to growcontinues to grow• PMI’s CAQ for IS PMI’s CAQ for IS

Development came Development came out summer 2002 out summer 2002

• CompTIA purchased CompTIA purchased the Gartner the Gartner Institute IT PM Institute IT PM exams and exams and launched the launched the IT IT Project+ examProject+ exam in in April 2001April 2001

See www.pmi.org and www.comptia.org for more details on certification exams

1,000 1,900 2,8004,400

6,41510,086

18,184

27,052

40,343

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1993 1994 1995 1996 1997 1998 1999 2000 2001Year

# PM

Ps

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IT Project DemandIT Project Demand• In 1998, In 1998,

corporate corporate America issued America issued 200,000 new-start 200,000 new-start application application development development projectsprojects

• In 2000, there In 2000, there were 300,000 were 300,000

• In 2001, the In 2001, the estimate was over estimate was over 500,000500,000

Number of New Application Development Projects

-

100,000

200,000

300,000

400,000

500,000

600,000

1998 2000 2001

*The Standish Group, "CHAOS 2001: A Recipe for Success," 2001

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• A 1995 Standish Group study (CHAOS) A 1995 Standish Group study (CHAOS) found that only found that only 16.2%16.2% of IT projects of IT projects were “successful” and over 31% were were “successful” and over 31% were canceled before completion, costing over canceled before completion, costing over $81 B in the U.S. alone. Time overruns $81 B in the U.S. alone. Time overruns were 222%, cost overruns were 189%, were 222%, cost overruns were 189%, and only 61% of features were providedand only 61% of features were provided

• The latest CHAOS Study (2001 data) The latest CHAOS Study (2001 data) showed improvements in all areas but showed improvements in all areas but still…still…

• Only Only 28%28% of IT projects succeeded of IT projects succeeded

Motivation for Improving IT Motivation for Improving IT Project ManagementProject Management

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Recent Research Findings Recent Research Findings on Managing IT Projectson Managing IT Projects

• Standish GroupStandish Group• What the Winners Do (Dragon What the Winners Do (Dragon

Milosevich)Milosevich)• Project Management and ROI, Project Management and ROI,

Maturity Levels (Ibbs and Kwak)Maturity Levels (Ibbs and Kwak)• Project Management and Project Management and

Competitive Advantage (Jugdev Competitive Advantage (Jugdev and Thomas)and Thomas)

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The 2001 Standish Group The 2001 Standish Group Report Findings (Compared to Report Findings (Compared to 1995 Report)1995 Report)• Time overruns significantly decreased Time overruns significantly decreased

to 163% compared to 222%to 163% compared to 222%• Cost overruns were down to 145% Cost overruns were down to 145%

compared to 189%compared to 189%• Required features and functions were Required features and functions were

up to 67% compared to 61%up to 67% compared to 61%• 78,000 U.S. projects were successful 78,000 U.S. projects were successful

compared to 28,000compared to 28,000• 28% of IT projects succeeded 28% of IT projects succeeded

compared to 16%compared to 16%

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Why the Improvements?Why the Improvements?

"The reasons for the increase in "The reasons for the increase in successful projects vary. First, the successful projects vary. First, the average cost of a project has been more average cost of a project has been more than cut in half. Better tools have been than cut in half. Better tools have been created to monitor and control progress created to monitor and control progress and better skilled project managers with and better skilled project managers with better management processes are being better management processes are being used. The fact that there are processes used. The fact that there are processes is significant in itself.”*is significant in itself.”*

The Standish Group, "CHAOS 2001: A Recipe The Standish Group, "CHAOS 2001: A Recipe for Success" (2001)for Success" (2001)

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““What the Winners Do”What the Winners Do”• Companies that excel in project Companies that excel in project

delivery capability:delivery capability:– Build an integrated project management Build an integrated project management

toolbox (use standard/advanced PM tools, toolbox (use standard/advanced PM tools, lots of templates)lots of templates)

– Grow competent project Grow competent project leadersleaders, , emphasizing business and soft skillsemphasizing business and soft skills

– Develop streamlined, consistent project Develop streamlined, consistent project delivery processesdelivery processes

– Install a sound but comprehensive set of Install a sound but comprehensive set of project performance metricsproject performance metrics

Dragan Milosevic, Portland State University, “Delivering Projects:What the Winners Do,” PMI Conference Proceedings, November 2001

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Using a Standardized Project Using a Standardized Project Management Approach Management Approach (SPM)*(SPM)*• Research found that a consistent (one-Research found that a consistent (one-size-fits-all) managerial approach may be size-fits-all) managerial approach may be essential to the successful standardization essential to the successful standardization of of certain aspectscertain aspects of project management, of project management, and a contingency approach is needed for and a contingency approach is needed for certain aspects, toocertain aspects, too

• Low standardizationLow standardization with a sufficient with a sufficient amount of variation is the more amount of variation is the more appropriate approachappropriate approach

• SPM factorsSPM factors include process, technology, include process, technology, organization, methods, metrics, culture, organization, methods, metrics, culture, and leadershipand leadership

Milesovich and Pantanakul, “The Impact of Standardized Project Management: NewProduct Development Projects versus Software Development Projects,” Proceedings ofPMI Research Conference 2002

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Significant Predictors of Significant Predictors of Project Management Project Management CapabilityCapability

• For NPD projects: methods, For NPD projects: methods, metrics, and culture metrics, and culture

• For SWD projects: For SWD projects: metrics, metrics, culture, and leadershipculture, and leadership

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Metrics, Culture, and Metrics, Culture, and Leadership*Leadership*

• MetricsMetrics: Projects using comprehensive : Projects using comprehensive metrics to measure and monitor metrics to measure and monitor performance will have fewer problemsperformance will have fewer problems

• CultureCulture: In a strong project culture, : In a strong project culture, team members are more satisfied, team members are more satisfied, engaged, and mutually supportiveengaged, and mutually supportive

• LeadershipLeadership: Projects managed by project : Projects managed by project managers with strong leadership skills managers with strong leadership skills are more successful and effectiveare more successful and effective

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Project Management Project Management ROI*ROI*• Over 94% of senior project management Over 94% of senior project management

professionals say that implementing PM professionals say that implementing PM added value to their organizationsadded value to their organizations

• Higher PM maturity (PMM) leads to Higher PM maturity (PMM) leads to – Better project schedule and cost performanceBetter project schedule and cost performance– Lower PM costs (ave. about 11% of PM revenues)Lower PM costs (ave. about 11% of PM revenues)

• Formula to predict increased company ROI Formula to predict increased company ROI based on increased PM maturity (PMM) based on increased PM maturity (PMM) levellevel– For example, current PMM of 2.3, future of 3.1, For example, current PMM of 2.3, future of 3.1,

upgrade cost $400K, 5% profit margin, $10 upgrade cost $400K, 5% profit margin, $10 million in revenues, PM/ROI = 40%million in revenues, PM/ROI = 40%

William Ibbs, “The $$$ Value of Project Management: Continuing the Search for PM’s ROI,” PDS ’02 Conference Proceedings, PMI-ISSIG, also seehttp://www.ce.berkeley.edu/pmroi/PMROI%20PMI%20Presentation%20Feb2001.pdf

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Project Management Project Management Maturity*Maturity*

*Figure in my book, Information Technology Project Management Second Edition, 2001

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But Today’s PM Maturity But Today’s PM Maturity Models Only Measure Explicit Models Only Measure Explicit Knowledge*Knowledge*

• Explicit knowledgeExplicit knowledge: “: “know whatknow what,” can be ,” can be put into IT, a digital or discrete process put into IT, a digital or discrete process that can be codified and transmitted in that can be codified and transmitted in formal, systematic language (Nonaka formal, systematic language (Nonaka 1994)1994)

• Tacit knowledgeTacit knowledge: “: “know howknow how”, in one’s ”, in one’s experience; hard to replicate and can be experience; hard to replicate and can be transferred indirectly though time transferred indirectly though time consuming socialization processes consuming socialization processes (Kaplan et al 2001)(Kaplan et al 2001)

*Jugdev and Thomas, “Blueprint for Value Creation: Developing and Sustaining aProject Management Competitive Advantage Through the Resource Based View,”Proceedings of PMI Research Conference,2002

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Need to Make PM a Need to Make PM a Strategic Asset (Just Like Strategic Asset (Just Like IT)IT)• Many executives view project Many executives view project

management as having worth at the management as having worth at the operational and tactical rather than operational and tactical rather than strategic levelstrategic level

• Resource Based View (RBV) frameworks Resource Based View (RBV) frameworks emphasize how firms create value and emphasize how firms create value and profits from their internal resources and profits from their internal resources and focuses on strategic assetsfocuses on strategic assets

• RBV is relevant to project management RBV is relevant to project management because it emphasizes intellectual because it emphasizes intellectual capitalcapital

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RBV Model*RBV Model*

high Social StrategicCapital Assets

Know HowPMMaturity

low Know What

low high

*Jugdev, Kam, presented at PMI Research Conference, July 2002

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What’s New In Project What’s New In Project Management SoftwareManagement Software• By 2001, there were hundreds of By 2001, there were hundreds of

different products to assist in different products to assist in performing project managementperforming project management

• Three main categories of tools:Three main categories of tools:– Low-end tools: Handle single or smaller Low-end tools: Handle single or smaller

projects well, cost under $200 per userprojects well, cost under $200 per user– Midrange tools: Handle multiple projects Midrange tools: Handle multiple projects

and users, cost $200-500 per user, and users, cost $200-500 per user, Project Project 20002000 most popular most popular

– High-end tools: Also called enterprise High-end tools: Also called enterprise project management software, often project management software, often licensed on a per-user basislicensed on a per-user basis

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Move Toward Enterprise PM Move Toward Enterprise PM SW?SW?• Microsoft’s Project 2002 now includes Microsoft’s Project 2002 now includes

an enterprise versionan enterprise version• Microsoft suggests organizations plan Microsoft suggests organizations plan

to take at least 3-6 months to install to take at least 3-6 months to install their enterprise software, mostly their enterprise software, mostly because organizations need to because organizations need to standardize a lot of things and change standardize a lot of things and change the way they work to get the most out the way they work to get the most out of the softwareof the software

• Milesovich’s research did not find PM Milesovich’s research did not find PM software as a distinguishing factor for software as a distinguishing factor for what the winners do, perhaps because what the winners do, perhaps because it’s still fairly new at the enterprise it’s still fairly new at the enterprise levellevel

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Personal Views on What’s Personal Views on What’s Changing and What Needs to Changing and What Needs to ChangeChange

• What’s ChangingWhat’s Changing– More people are More people are

“learning the “learning the language language according to PMI”according to PMI”

– More people are More people are getting certifiedgetting certified

– People are under People are under even more even more pressure at home pressure at home and work, often and work, often have too many have too many projects and projects and unrealistic unrealistic deadlinesdeadlines

• What Needs to ChangeWhat Needs to Change– Top management needs Top management needs

to emphasize a common to emphasize a common language that fits in language that fits in their organizationstheir organizations

– Certification is not Certification is not enough: Need to enough: Need to useuse best practicesbest practices

– Organizations need to Organizations need to focus on sound focus on sound business planning: pick business planning: pick the high value projects the high value projects and focus on them, get and focus on them, get rid on unnecessary rid on unnecessary workwork

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Suggested ReferencesSuggested References

• Lots available (see citations and next slide)Lots available (see citations and next slide)• Take advantage of PMI’s web sites and Take advantage of PMI’s web sites and

conferencesconferences– www.pmi.orgwww.pmi.org– www.pmi-mn.orgwww.pmi-mn.org– www.pmi-issig.orgwww.pmi-issig.org

• My book and web site have lots of My book and web site have lots of referencesreferences– www.kathyschwalbe.comwww.kathyschwalbe.com (goes to (goes to

www.augsburg.edu/ppages/~schwalbewww.augsburg.edu/ppages/~schwalbe with no with no ads/distractionsads/distractions

– Information Technology Project Management, Information Technology Project Management, Second Edition (on Second Edition (on www.www.amazonamazon.com).com)

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Sources for Project Sources for Project Management ResearchManagement Research

• PMI’s research pages (PMI’s research pages (www.pmi.org/researchwww.pmi.org/research))

• Historical PM Research database Historical PM Research database (Kloppenborg, Opfer, and Gallagher)(Kloppenborg, Opfer, and Gallagher)

• Project management research on the web (Project management research on the web (www.fek.umu.se/irnop/projweb.htmlwww.fek.umu.se/irnop/projweb.html))

• Research methods knowledge base Research methods knowledge base

((http://trochim.human.cornell.edu/kbhttp://trochim.human.cornell.edu/kb))• The Standish GroupThe Standish Group ((www.www.standishgroupstandishgroup.com.com))

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PMI’s ISSIG Web SitePMI’s ISSIG Web Sitewww.pmi-issig.orgwww.pmi-issig.org

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Several Free WebCasts and Several Free WebCasts and Great ConferencesGreat Conferences

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Questions or Comments?Questions or Comments?