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Applying business-process reengineering to IT project development
International
Journal of Project Management 1994 12 (4) 2055208
Applying business-process reengineering to IT project development David Lisburn and Stephen Baxter Dun & Bradstreet
Europe,
Holmers
Farm
Way, High
Wycombe, Bucks HPl24UL,
UK
Despite the business importance of information technology, IT development functions often fail to serve the business needs of their parent organisations because of weaknesses in the management of development projects. In 1991-92, an internal study at Dun & Bradstreet Europe, UK, highlighted a lack of formal control of the definition and initiation of projects, and poor control of projects by managers in a conventional hierarchical management structure. The organisation therefore introduced an innovative approach to IT project management using techniques borrowed from business-process reengineering (BPR). The redesign was based on the principles of dedicated multifunction teams and empowered project managers and an improved approach to project definition. Senior business executives were given direct control over IT projects through a new investment-management process. Projects were defined and initiated using project mandates which captured project definitions and success criteria in business terms. Measurable gains in business performance resulted . Complex projects delivered major business benefits, average timescales were reduced, and adherence to cost and timescale targets was improved. This innovation was a BPR exercise, and its success commends the wider application of these ideas. Keywords:
business-process
engineering,
information
technology
Information technology (IT) is revolutionising the competitive environment in many industries. IT developments can be used l
l
l
to increase efficiency, by automating business processes; to increase effectiveness, by enabling resources to be used in new ways to achieve better business results; to provide strategic advantage, by changing the nature of the business.
However, IT development functions, whether they are resourced within an organisation or outside, often fail to serve the business needs of their parent organisations, because of weaknesses in project management. l
Objectives and client satisfaction.. IT developments are often complex and technically ambitious, and yet fail
This paper was the first prize winner in the Sir Monty Finniston Awards for Project Management 1994 (sponsored by IBM and The Obsewer).
0263-7863/94/040205-04
0
1994 Butterworth-Heinemann
Ltd
to address the objectives of the businesses they serve. The ‘benefits’ of IT projects are often expressed as technical features rather than as true business benefits. Cost and timescale: IT developments are too often overlarge, and too often fail to meet project objectives of cost and timescale. Project leadtimes are frequently far longer than the cycle times of the businesses they serve. There are many cases in the literature of failed major IT developments; recent examples include the UK Stock Exchange Taurus initiative, and the automation of the London Ambulance Service in the UK. In 1991-92, the business-information company Dun & Bradstreet Europe (D&B Europe) in the UK was dissatisfied with the extent to which its in-house IT function supported corporate goals. Project timescale and cost targets were too often missed, and business objectives were not fully served. D&B Europe therefore introduced an innovative approach to IT project management using techniques borrowed from business-process reengineering (BPR). The purpose of this innovation was to: 205
Applying business -process reengineering to IT projwt development D L&burn uncl S Bcrxter l
l
improve the control of the business over IT by providing mechanisms whereby the business benefits of IT projects could be defined and monitored; increase the control of managers over their projects, thereby improving adherence to cost and timescale targets.
In this paper, the scope of this innovation is set out, and its business benefits for D & B Europe summarised.
Dun & Bradstreet Europe: background D&B Europe is part of the Dun & Bradstreet Corporation based in the USA. The corporation is the world’s largest supplier of hu.sine.ss i@vmation. The information serves customer needs for credit xwices (for example the solvency ratings of potential clients or suppliers), rrcekuhles manugement sewices (for example debt-collection services), and business marketing services (for example lists of potential contacts). D&B Europe’s products are reports drawn from the data. Much of the data is held on large ‘legacy’ mainframe systems, but the most advanced D&B systems use modern interfacing protocols to populate customer databases with relevant business data. The corporation serves 2 M customers in 60 countries; its databases hold data on more than 30M businesses. D&B Europe has 92 000 customers and over 3 000 staff, and an annual revenue of US$300M. In 1991, D&B Europe was under severe competitive pressure. The increasing availability of business data from public sources. such as Companies House in the UK, was lowering the barriers to competitive entry into the business-information marketplace. Furthermore, many new entrants were able to exploit the capabilities of newer technical developments, such as client-server platforms, which provided lower-cost solutions.
IT project management The corporate demand of D&B Europe in 1991 was for a hrouder product runge developed more rupidl~s to facilitate growth in a fast-changing marketplace. However, the following factors had to be taken into account: In 1991, only 39% of D&B Europe’s IT development projects finished on or under budget. In 1991, only 25% of D&B Europe’s IT projects came in on or before the scheduled due date. The average duration of D&B Europe development projects in 1991 was nine months. This was much longer than marketing cycle times (2-3 months), was comparable with products’ useful lifetimes in the marketplace (8-10 months), and was largely independent of the project’s functional content or business value, because (as shown below) the duration was driven by business processes within the development function. In response, the senior management of the D&B Europe IT development function, known as EBIC (the European Business Information Centre), conducted an internal review of business processes within EBIC, and highlighted the following problem areas.
0hjectitye.s und client .satisfuc.tion: There was no formal control of the definition or initiation of projects, and no formal expression of the business objectives of projects. Product initiatives generally came from the marketing function, senior management, or from country-based business units. Conceptual ideas were passed to EBIC management in general by informal means (projects could be initiated by telephone calls or ‘corridor’ conversations between business representatives and technicians). and there was no formal transmission of the project scope to the technical, marketing or other business departments. There was little overall coordination or control. Projects were easy to initiate (but difficult to complete). Often, the actual product launch was the first contact with the product by the customer of the process or with marketing groups since the initiation of the process, and a mismatch between delivered product and user expectations was common. Cost und timescale: EBIC was not, in 1991, organised around project teams; rather, it was organised as a series of specialist functional areas. In 1991. there were approximately 140 development and application support staff within EBIC. These were organised into specialisms based either on steps in EBIC’s project methodology (analysts. programmers, specialist testers etc.). or on expertise in particular systems within the EBIC portfolio. Developments passed through the hands of several of the specialist groups on their way to production. Thus a staff member typically worked on many projects at once. and all the staff were expected to find time for the rnuintrrwa~ of systems of which they had a special understanding. For example, in October 1991. the average staff member worked on 3.5 concurrent projects (including support activities). EBIC was founded in 1983 as D & B Europe’s first large computer site; it was initially based on a software suite imported from the USA. and it was managed essentially as a production operution. Given this orientation, it is not surprising to find that the management approach to the allocation of staff to developments was based on getting the most out of the time available from specialists. and hence the functional organisation seemed natural. However, the consequence of this organisation was that it was virtually impossible for project managers, working in a matrix-management environment, to control their projects.
In 1991, ation; in delivered was clear objectives.
EBIC was not regarded as a failing organisthat year alone, 23 major new projects were in ten countries across Europe. However, it that EBIC had to change to support corporate
Innovation in IT project management In response to these problems as diagnosed, a new approach to IT project management at D&B Europe was developed by EBIC senior management and proposed to the D&B Europe board in October 1991. The problems of D&B Europe in 1991, which arose from conflict between a dynamic business environment
Applying
.eengineering to IT project development:
business-process
0 Projects were to be initiated only by the sanction of the EDRB, by means of the signature of one-page project definitions called mandates. The mandates were to include
and EBIC’s ‘traditional’ function-based organisational form, were common to many older organisations in the West. Recent years have seen a drive towards new organisational forms in a wide range of business areas to address the challenges of the fast rate of change and increasing competitiveness of the 1990s. Businessprocess reengineering has emerged as an umbrella term to describe this type of organisational refocus. BPR has become best known for success stories based on the elimination of unnecessary steps in business processes. Vertically structured departments of functional specialists through which projects and orders have to pass are replaced by seamless horizontal processes. Functional divides are bridged or removed completely, and a ‘process owner’ oversees everyone involved. However, reengineering also embraces the management of organisational change in related areas, including l l l
a project sponsor, nominated by the EDRB; a ‘business project manager’, nominated by the EDRB; the project’s title, its mission (in one sentence), and its business objectives stated in measuruhle terms; a summary of human resources required, the estimated budget, and the target dates. The purpose of the mandates was to provide a mechanism to focus on the business justification of projects. Projects were deliberately limited to small teams (68 people) and short durations (69 months). Only those projects which (in the EDRB’s judgment) addressed genuine business needs would be approved, and the project’s success criteria were only those items identified in the mandates, specifically business outcomes, and not merely technical deliverables, or even project targets such as the end date and the budget.
job definitions and organisational structures; management and control systems; values and beliefs.
The changes are intended, as a whole, to achieve dramatic performance improvements in speed, cost and quality. Practical experience of reengineering remains limited, but there is some evidence that BPR can achieve quantum leaps in productivity and effectiveness. The savings come not in the tasks that make up the process themselves, but in the cutting of the waiting time between tasks in a process and the complete elimination of administrative tasks which fail to add value to the customers. Information technology is often used to support reengineering initiatives. Old systems designed to automate antiquated processes must be revised in favour of systems based on the new processes. However, there appears to be little reported experience of applying BPR ideas to IT development itself as a business process. The proposed redesign of the D&B Europe IT project-development process, inspired by reengineering concepts and based on the principles of dedicated teams and empowered project managers, was intended to break through the barrier of existing practices, and enable EBIC to support ambitious corporate objectives. l
l
Cost and timescale: The resourcing of technical developments within EBIC was redesigned on the basis of the principles of dedicated, multifunction project teams and empowered project managers: Once a project had been initiated, the appointed ‘business project manager’ would be sole/~ responsible for the direction and success (or otherwise) of his/her project, both technically and in terms of the business objectives. After the signature of the mandate, the appointed business project manager was empowered to assemble a dedicated team from a ‘resource pool’, with the help of a facilitating resource-management function. Each team was to include user and marketing representatives, as well as technicians. Although practical difficulties would be encountered with this, the formation of the dedicated teams would reduce significantly the number of ‘handoffs’ between technical specialists in the development process. To liberate development staff from maintenance activities, a full-time application-systems maintenance and support group was to be founded.
Objectives and client sati?fuction: Senior executives were to be offered control over projects through a new investment-management process, formalised and installed at board level:
It can be seen that a genuine effort was made to reengineer the process of delivering IT development projects at EBIC, with the removal of functional barriers between the steps involved, the placing of the whole process under the control of one person (the business project manager), and the provision of the mandate which clearly and succinctly stated the measures of success for the project. The reengineering implementation plan presented to the D&B Europe board in October 1991 was actually quite cautious. Limits on empowerment and the breakup of the line functions were suggested. In addition, it was felt that not all projects (for example major infrastructural changes) would suit the new process, and it was proposed that some new projects should be run in the new fashion for the first year as pilots to prove the process.
3 An investment-management board called the European Development Review Board (EDRB) was to be established. This was to include, and report to, the president of D&B Europe. The members of the board were to include financial, marketing and technical representatives. The board would set project objectives, allocate resources, appoint managers, and be the endpoint for issue and change resolution. The objective was to enable business cases and budgets for projects to be established, and to ensure the visibility and control of projects by senior management. No such single decision-making body had existed within D&B Europe before. International Journal of Project Management 1994 Volume 12 Number
D Lisburn and S Baxter
4
207
The response from the board, however, was enthusiastic acceptance. There was a great deal of readiness for change. The need to make EBIC a more responsive, project-based organisation had been recognised for many years, and some moves in this direction had already been made. From the start of the next financial year, just six weeks after the presentation, all new projects were to be run according to the new principles. Most (but not all) projects still in flight would be passed through the process retrospectively.
Results: improvement in business performance The innovation in IT project-management resulted in measurable gains in business
techniques performance.
Of9jectil~e.s and client sutisfuction: Complex projects came through the new development process delivering mqjor business hen
Conclusions In 1991-92, Dun & Bradstreet Europe was dissatisfied with the way in which its in-house IT function supported corporate goals. Project timescale and cost targets were too often missed, and business objectives were not fully served. D&B Europe therefore introduced an innovative approach to IT project management using techniques borrowed from business-process reengineering. The redesign of the D&B Europe IT project development process was based on the principles of
208
dedicated teams, empowered project managers, and an enhanced project-definition process. The innovation in IT project-management techniques resulted in measurable gains in business performance. Complex projects came through the new development process delivering major business benefits, average development timescales were reduced, and adherence to cost and timescale targets was improved. IT is generally cited as an enabler of BPR, but the practical application of the concepts of BPR to IT development itself as a business process is limited. The innovation in IT project management at D & B Europe in 1991 was such a BPR exercise, and its success, as demonstrated in terms of business benefits and project control, commends the wider application of these ideas.
Bibliography
Journal of Project Management 1994 12 (4) 2055208
Applying business-process reengineering to IT project development David Lisburn and Stephen Baxter Dun & Bradstreet
Europe,
Holmers
Farm
Way, High
Wycombe, Bucks HPl24UL,
UK
Despite the business importance of information technology, IT development functions often fail to serve the business needs of their parent organisations because of weaknesses in the management of development projects. In 1991-92, an internal study at Dun & Bradstreet Europe, UK, highlighted a lack of formal control of the definition and initiation of projects, and poor control of projects by managers in a conventional hierarchical management structure. The organisation therefore introduced an innovative approach to IT project management using techniques borrowed from business-process reengineering (BPR). The redesign was based on the principles of dedicated multifunction teams and empowered project managers and an improved approach to project definition. Senior business executives were given direct control over IT projects through a new investment-management process. Projects were defined and initiated using project mandates which captured project definitions and success criteria in business terms. Measurable gains in business performance resulted . Complex projects delivered major business benefits, average timescales were reduced, and adherence to cost and timescale targets was improved. This innovation was a BPR exercise, and its success commends the wider application of these ideas. Keywords:
business-process
engineering,
information
technology
Information technology (IT) is revolutionising the competitive environment in many industries. IT developments can be used l
l
l
to increase efficiency, by automating business processes; to increase effectiveness, by enabling resources to be used in new ways to achieve better business results; to provide strategic advantage, by changing the nature of the business.
However, IT development functions, whether they are resourced within an organisation or outside, often fail to serve the business needs of their parent organisations, because of weaknesses in project management. l
Objectives and client satisfaction.. IT developments are often complex and technically ambitious, and yet fail
This paper was the first prize winner in the Sir Monty Finniston Awards for Project Management 1994 (sponsored by IBM and The Obsewer).
0263-7863/94/040205-04
0
1994 Butterworth-Heinemann
Ltd
to address the objectives of the businesses they serve. The ‘benefits’ of IT projects are often expressed as technical features rather than as true business benefits. Cost and timescale: IT developments are too often overlarge, and too often fail to meet project objectives of cost and timescale. Project leadtimes are frequently far longer than the cycle times of the businesses they serve. There are many cases in the literature of failed major IT developments; recent examples include the UK Stock Exchange Taurus initiative, and the automation of the London Ambulance Service in the UK. In 1991-92, the business-information company Dun & Bradstreet Europe (D&B Europe) in the UK was dissatisfied with the extent to which its in-house IT function supported corporate goals. Project timescale and cost targets were too often missed, and business objectives were not fully served. D&B Europe therefore introduced an innovative approach to IT project management using techniques borrowed from business-process reengineering (BPR). The purpose of this innovation was to: 205
Applying business -process reengineering to IT projwt development D L&burn uncl S Bcrxter l
l
improve the control of the business over IT by providing mechanisms whereby the business benefits of IT projects could be defined and monitored; increase the control of managers over their projects, thereby improving adherence to cost and timescale targets.
In this paper, the scope of this innovation is set out, and its business benefits for D & B Europe summarised.
Dun & Bradstreet Europe: background D&B Europe is part of the Dun & Bradstreet Corporation based in the USA. The corporation is the world’s largest supplier of hu.sine.ss i@vmation. The information serves customer needs for credit xwices (for example the solvency ratings of potential clients or suppliers), rrcekuhles manugement sewices (for example debt-collection services), and business marketing services (for example lists of potential contacts). D&B Europe’s products are reports drawn from the data. Much of the data is held on large ‘legacy’ mainframe systems, but the most advanced D&B systems use modern interfacing protocols to populate customer databases with relevant business data. The corporation serves 2 M customers in 60 countries; its databases hold data on more than 30M businesses. D&B Europe has 92 000 customers and over 3 000 staff, and an annual revenue of US$300M. In 1991, D&B Europe was under severe competitive pressure. The increasing availability of business data from public sources. such as Companies House in the UK, was lowering the barriers to competitive entry into the business-information marketplace. Furthermore, many new entrants were able to exploit the capabilities of newer technical developments, such as client-server platforms, which provided lower-cost solutions.
IT project management The corporate demand of D&B Europe in 1991 was for a hrouder product runge developed more rupidl~s to facilitate growth in a fast-changing marketplace. However, the following factors had to be taken into account: In 1991, only 39% of D&B Europe’s IT development projects finished on or under budget. In 1991, only 25% of D&B Europe’s IT projects came in on or before the scheduled due date. The average duration of D&B Europe development projects in 1991 was nine months. This was much longer than marketing cycle times (2-3 months), was comparable with products’ useful lifetimes in the marketplace (8-10 months), and was largely independent of the project’s functional content or business value, because (as shown below) the duration was driven by business processes within the development function. In response, the senior management of the D&B Europe IT development function, known as EBIC (the European Business Information Centre), conducted an internal review of business processes within EBIC, and highlighted the following problem areas.
0hjectitye.s und client .satisfuc.tion: There was no formal control of the definition or initiation of projects, and no formal expression of the business objectives of projects. Product initiatives generally came from the marketing function, senior management, or from country-based business units. Conceptual ideas were passed to EBIC management in general by informal means (projects could be initiated by telephone calls or ‘corridor’ conversations between business representatives and technicians). and there was no formal transmission of the project scope to the technical, marketing or other business departments. There was little overall coordination or control. Projects were easy to initiate (but difficult to complete). Often, the actual product launch was the first contact with the product by the customer of the process or with marketing groups since the initiation of the process, and a mismatch between delivered product and user expectations was common. Cost und timescale: EBIC was not, in 1991, organised around project teams; rather, it was organised as a series of specialist functional areas. In 1991. there were approximately 140 development and application support staff within EBIC. These were organised into specialisms based either on steps in EBIC’s project methodology (analysts. programmers, specialist testers etc.). or on expertise in particular systems within the EBIC portfolio. Developments passed through the hands of several of the specialist groups on their way to production. Thus a staff member typically worked on many projects at once. and all the staff were expected to find time for the rnuintrrwa~ of systems of which they had a special understanding. For example, in October 1991. the average staff member worked on 3.5 concurrent projects (including support activities). EBIC was founded in 1983 as D & B Europe’s first large computer site; it was initially based on a software suite imported from the USA. and it was managed essentially as a production operution. Given this orientation, it is not surprising to find that the management approach to the allocation of staff to developments was based on getting the most out of the time available from specialists. and hence the functional organisation seemed natural. However, the consequence of this organisation was that it was virtually impossible for project managers, working in a matrix-management environment, to control their projects.
In 1991, ation; in delivered was clear objectives.
EBIC was not regarded as a failing organisthat year alone, 23 major new projects were in ten countries across Europe. However, it that EBIC had to change to support corporate
Innovation in IT project management In response to these problems as diagnosed, a new approach to IT project management at D&B Europe was developed by EBIC senior management and proposed to the D&B Europe board in October 1991. The problems of D&B Europe in 1991, which arose from conflict between a dynamic business environment
Applying
.eengineering to IT project development:
business-process
0 Projects were to be initiated only by the sanction of the EDRB, by means of the signature of one-page project definitions called mandates. The mandates were to include
and EBIC’s ‘traditional’ function-based organisational form, were common to many older organisations in the West. Recent years have seen a drive towards new organisational forms in a wide range of business areas to address the challenges of the fast rate of change and increasing competitiveness of the 1990s. Businessprocess reengineering has emerged as an umbrella term to describe this type of organisational refocus. BPR has become best known for success stories based on the elimination of unnecessary steps in business processes. Vertically structured departments of functional specialists through which projects and orders have to pass are replaced by seamless horizontal processes. Functional divides are bridged or removed completely, and a ‘process owner’ oversees everyone involved. However, reengineering also embraces the management of organisational change in related areas, including l l l
a project sponsor, nominated by the EDRB; a ‘business project manager’, nominated by the EDRB; the project’s title, its mission (in one sentence), and its business objectives stated in measuruhle terms; a summary of human resources required, the estimated budget, and the target dates. The purpose of the mandates was to provide a mechanism to focus on the business justification of projects. Projects were deliberately limited to small teams (68 people) and short durations (69 months). Only those projects which (in the EDRB’s judgment) addressed genuine business needs would be approved, and the project’s success criteria were only those items identified in the mandates, specifically business outcomes, and not merely technical deliverables, or even project targets such as the end date and the budget.
job definitions and organisational structures; management and control systems; values and beliefs.
The changes are intended, as a whole, to achieve dramatic performance improvements in speed, cost and quality. Practical experience of reengineering remains limited, but there is some evidence that BPR can achieve quantum leaps in productivity and effectiveness. The savings come not in the tasks that make up the process themselves, but in the cutting of the waiting time between tasks in a process and the complete elimination of administrative tasks which fail to add value to the customers. Information technology is often used to support reengineering initiatives. Old systems designed to automate antiquated processes must be revised in favour of systems based on the new processes. However, there appears to be little reported experience of applying BPR ideas to IT development itself as a business process. The proposed redesign of the D&B Europe IT project-development process, inspired by reengineering concepts and based on the principles of dedicated teams and empowered project managers, was intended to break through the barrier of existing practices, and enable EBIC to support ambitious corporate objectives. l
l
Cost and timescale: The resourcing of technical developments within EBIC was redesigned on the basis of the principles of dedicated, multifunction project teams and empowered project managers: Once a project had been initiated, the appointed ‘business project manager’ would be sole/~ responsible for the direction and success (or otherwise) of his/her project, both technically and in terms of the business objectives. After the signature of the mandate, the appointed business project manager was empowered to assemble a dedicated team from a ‘resource pool’, with the help of a facilitating resource-management function. Each team was to include user and marketing representatives, as well as technicians. Although practical difficulties would be encountered with this, the formation of the dedicated teams would reduce significantly the number of ‘handoffs’ between technical specialists in the development process. To liberate development staff from maintenance activities, a full-time application-systems maintenance and support group was to be founded.
Objectives and client sati?fuction: Senior executives were to be offered control over projects through a new investment-management process, formalised and installed at board level:
It can be seen that a genuine effort was made to reengineer the process of delivering IT development projects at EBIC, with the removal of functional barriers between the steps involved, the placing of the whole process under the control of one person (the business project manager), and the provision of the mandate which clearly and succinctly stated the measures of success for the project. The reengineering implementation plan presented to the D&B Europe board in October 1991 was actually quite cautious. Limits on empowerment and the breakup of the line functions were suggested. In addition, it was felt that not all projects (for example major infrastructural changes) would suit the new process, and it was proposed that some new projects should be run in the new fashion for the first year as pilots to prove the process.
3 An investment-management board called the European Development Review Board (EDRB) was to be established. This was to include, and report to, the president of D&B Europe. The members of the board were to include financial, marketing and technical representatives. The board would set project objectives, allocate resources, appoint managers, and be the endpoint for issue and change resolution. The objective was to enable business cases and budgets for projects to be established, and to ensure the visibility and control of projects by senior management. No such single decision-making body had existed within D&B Europe before. International Journal of Project Management 1994 Volume 12 Number
D Lisburn and S Baxter
4
207
The response from the board, however, was enthusiastic acceptance. There was a great deal of readiness for change. The need to make EBIC a more responsive, project-based organisation had been recognised for many years, and some moves in this direction had already been made. From the start of the next financial year, just six weeks after the presentation, all new projects were to be run according to the new principles. Most (but not all) projects still in flight would be passed through the process retrospectively.
Results: improvement in business performance The innovation in IT project-management resulted in measurable gains in business
techniques performance.
Of9jectil~e.s and client sutisfuction: Complex projects came through the new development process delivering mqjor business hen
Conclusions In 1991-92, Dun & Bradstreet Europe was dissatisfied with the way in which its in-house IT function supported corporate goals. Project timescale and cost targets were too often missed, and business objectives were not fully served. D&B Europe therefore introduced an innovative approach to IT project management using techniques borrowed from business-process reengineering. The redesign of the D&B Europe IT project development process was based on the principles of
208
dedicated teams, empowered project managers, and an enhanced project-definition process. The innovation in IT project-management techniques resulted in measurable gains in business performance. Complex projects came through the new development process delivering major business benefits, average development timescales were reduced, and adherence to cost and timescale targets was improved. IT is generally cited as an enabler of BPR, but the practical application of the concepts of BPR to IT development itself as a business process is limited. The innovation in IT project management at D & B Europe in 1991 was such a BPR exercise, and its success, as demonstrated in terms of business benefits and project control, commends the wider application of these ideas.
Bibliography