Posts filed under ‘Business and Change’

The New Project Manager

I had an interesting discussion last week again about the changing role of Project Managers. Quite timely, PMI posted a relevant article in their current PM Passport (‘The Next Generation of Project Managers’).

So what are the distinguishing qualities of the New PM? I’d say:

  • Collaborative/participative rather than autocratic leadership style
  • Understanding and appreciation of the business, seeing the project in the larger picture
  • Living the responsibility for project outcomes
  • Being a specialist in management disciplines such as Project Management in general (in different flavors, as fits best with the current project), Change Management, Communications and the like, rather than a technical expert
  • Using Web 2.0 tools, easily working across building / country borders

This trend is for one thing coming from within the PM community, accelerated by organizations such as PMI or OCG. For another thing, changing characteristics of the business environment and the projects themselves call for changed project leaders: Projects safely based in one ‘silo’ of an organization are getting somewhat rare. Most projects nowadays have a technical as well as an organizational component, touching different departments such as IT, HR, Finance, Sales,… Often, the need to integrate into the existing IT environments adds to the complexity. In such an environment, the ‘new’ PM style is more likely to succeed.

As with many things, also this medal has two sides: Not all organizations want / are ready or capable to deal with this new style yet, as it can seriously interfere with established structures, roles and the culture.

People I talked to seemed to share the impression that Germany is a bit behind in this trend. It is quite amazing how many job adverts for ‘senior’ PMs also list deep technical skills in one or the other area as requirement. Maybe this is due to Germany’s strong engineering culture, combined with and some typical German traits?

Would you second these thoughts and observations? Any comments?

March 22, 2010 at 09:22 1 comment

IT Study 2010 and Panel Discussion

As promised (better late than never), a few more thoughts from the presentation of the results of the ‘IT Studie 2010’ at the Cebit. The study involved about 280 mid-size (min of 200m EUR yearly turnover) to large companies from Germany, Austria and Switzerland. (see my first Cebit post here)

I could not find the detailed results of the study online, so I’ll have to rely on my notes. The most interesting part was the panel discussion with CIOs of Fraport, Daimler, and Allianz, as well as the German MD of SAP, anyway.

A recurring topic was innovation vs. stability and the need to find a healthy balance here. Also, IT customers are becoming more experienced (and cost aware) and don’t follow every hype blindly any more.

I won’t bore you to death with numbers of desktop / server OS usage etc., you know the picture. What was interesting: Currently, 80% run Windows XP on the desktop, around 10% Vista, only 3% Windows 7. In three years, Windows 7 is expected to be running on 77% of the desktops. In the panel discussion afterward, it turned out that it is pretty common practice to skip major releases. Daimler and Fraport CIOs stated they had skipped Vista completely on their company desktops, and will make the move from XP directly to Windows 7. Speaking of innovation vs. stability!

Dr. Kleinemeier’s (SAP) comment on that topic was that SAP is trying to accommodate customers better by keeping the application core stable, and allowing them to update / add enhancements with more flexibility.

Many organizations expect shadow IT to grow again, facing reduced budgets.

I was a bit surprised when they stated the average usage time for laptops is 3.7 years, tendency still growing. Feeling better now about your Stone Age model?

ERP and particularly CRM systems are still huge building sites and will keep many of us IT professionals busy. 65% of the study participants had stated that their primary ERP system is SAP, followed by 10%, Oracle 4%, plus others. Interestingly, 30% of the SAP customers stated also they were open/looking for other options, which was far more than the other groups.

Little quiz: How many companies said that they have no CRM system at all?

  1. 10%
  2. 24%
  3. 37%

The correct answer is: 37%! Not sure what they’re using, maybe pen and paper or excel sheets they didn’t count as CRM ‘system’.

How many companies do you think have a ‘standard’ CRM system (SAP, MS, Oracle, Salesforce.com)?

  1. 15%
  2. 28%
  3. 55%

Correct answer: 28%. So there is still an amazingly high potential for standardization and interesting migration projects ;)

To summarize: 37% have no CRM system, 28% ‘standard’ systems, plus 35% ‘non-standard’ systems.

In the discussion, the three attending CIOs named usability as biggest challenge with their ERP systems, followed by up-to-dateness of data and support of mobile devices. Will usability of ERP systems ever be comparable to consumer products? Answer: This is a real balancing act with other requirements such as security and integrity, but one of the focus areas of the near future. Folks like sales reps or consultants working at their customers’ sites use their fancy iPhones, Blackberries, etc. The second they connect to their companies’ IT systems, things get slow, ugly, complicated, and they loose patience. Sounding familiar?

And last but not least something that was not mentioned at all: Cloud computing. It was probably in the study somewhere under virtualization as a means to reduce cost, but was not a big topic for the CIOs (yet?). One of them stated that they’re still waiting for a fair and attractive cost model.

If I ever find the study results online, I’ll post the link here.

March 12, 2010 at 20:24 Leave a comment

‘The IT Department is not a service provider’

Yesterday (Mar 3, 2010), I’ve spent an interesting day at the Cebit in Hannover, the ‘world’s biggest computer fair’ (really?). Overall, I didn’t find anything revolutionary. The fair was really busy, with many people at least in the central halls. It was a very interesting day anyhow. For me, presentations and panel discussions and new business contacts were most important.

In the morning, I joined a presentation of the results of a study being performed every year (‘IT Studie 2010′), which asks IT decision makers (CIOs, COOs etc.) of medium-sized to large companies about current and expected future developments. I’ll post more about it in my next post.

The panel discussion following the presentation of the study results was really interesting, with CIOs of Allianz, Fraport and Daimler AG, and the Managing Director of SAP in Germany, Michael Kleinemeier.

Towards the end, when discussing the CIO’s and IT’ role in modern companies, Daimler’s CIO Dr. Gorriz made a very clear statement: ‘The IT department is NOT a service provider within the company’. That was when I thought ‘hum?’, but then he continued: ‘… but an integral part, business partner and enabler’. Ok, that made sense.

For me, this is one more symbol for the IT growing up. It may sound pretty bold at first, but when you think about it, most companies could not survive without effective IT support of their business. In many cases, the business is purely immaterial, totally dependent on IT. This has implications for the CIO role and for IT strategy as well. IT strategy is not just an afterthought of the business strategy of the company, but needs to be fully integrated, and jointly developed.

It was really good to see this group of modern, self-confident CIOs, and Herrn Kleinemeier in the middle of them, sharing their thoughts. If possible, I’ll attend the same presentation next year. And then I’ll make sure I’ll have the time to enjoy the drinks and snacks afterward ;)

March 4, 2010 at 14:25 1 comment

Agile Change Projects – a great fit!

Yesterday (Feb 12, 2010), I attended a presentation coordinated by the PMI Chapter Frankfurt, local group Hamburg. The topic was ‘Why change projects do not work’. The guest speaker Malte Foegen (wibas GmbH) delivered a very lively, entertaining and inspiring presentation. He presented an iterative approach on how to achieve change in small but effective steps, illustrated by an example of a big German company. (I’ll see if I can point to the slides later on).

I had a big aha moment when I realized that they were actually applying an AGILE approach in this corporate change initiative!

You might have read some of my earlier blog postings about managing change, and the inherent issues. I have quite a lot of experience with change programs and ‘classic’ change methodologies, and I have learned a lot about agile approaches recently, but hadn’t made the connection so far. Listening to Mr Foegen, it really hit me that this is a very good fit. Obviously, they successfully used it in practice.

Of course there is one big difference to a ‘regular’ Scrum project: In Scrum, you have a team of usually up to 9 people who execute the work themselves. In the context of this corporate change initiative, a lot of agile elements were being used (short sprints and the respective planning and retrospectives, ‘Product’ (Change) Backlog, Vision, etc.). Care was taken for a high level of involvement of the ‘field’, e.g. by identifying ‘best of the breed’ practices already existing in the field instead of making up new bureaucratic processes. The biggest difference: The people actually needed to DO the change (for example, adopting new monitoring techniques) were scattered across the organization, indeed THE ORGANIZATION had to implement the defined changes. So the change program was organized in an agile manner, involving top management.

Doing small but effective, regular steps every month achieved a significant and sustainable change in the end. A good example Mr Foegen used throughout the presentation, would be the introduction of Planning Poker as part of a larger change initiative targeted at improving estimating and forecasting quality. As one iteration in your change project, you could roll out Planning Poker to respective parts of the organization in one month. You’d have implemented a small increment of your change, and with the positive energy created you’d build up momentum for the coming parts.

All in all, really interesting. And b.t.w. – this is also a good example for a non-software development project using Scrum (see earlier discussions in this blog).

If you’re interested, have a look at the ‘Map of change’ (links below). Sometimes you’re not sure if you should laugh or cry, maybe there’s just too much truth in it. I found myself giggling a few times. My personal highlight was ‘the big bang ferries’ that leave the ivory tower regularly but usually sink in the shallows of quick wins. A few actually reach the land but leave burnt ground :-D

Happy weekend!

February 13, 2010 at 14:53 Leave a comment

Net Present Value explained in simple words

In one of my last posts (Agile-Giving the business options back) I promised a follow-up regarding Net Present Value (NPV). Here you go! This will be VERY basic, so if you’re familiar with the concept you might be seriously bored.

NPV is a financial appraisal method that can be universally applied, and is an extraordinary fit with agile product development. I’ll try to explain it in simple everyday language, even if this might be at the cost of some academic rigor. As a start, let’s break it into two parts: NET and PRESENT VALUE.

Lets’ start with Present Value: Assume you are presented with the following choices:

  1. Someone offers you to give you 100 EUR today.
  2. Someone offers you to give you 100 EUR one year from today.

How do you choose? Of course you’d pick option 1. If you get 100 EUR today, you can invest it, and in a year from now you might have 102 EUR if your investment has a modest return of 2%. In addition, inflation will eat off a few pieces of your 100 EUR bill –  so in a year from now, the same bill might buy you only 97 EUR worth of goods. Generally, there is a preference to get money rather sooner than later, so you’d need some form of compensation to get the money later.

–> Present Value is today’s value of an amount of money in the future.

Now, let’s make it a bit harder. How about this choice:

  1. Someone offers you to give you 100 EUR today.
  2. Someone offers you to give you 105 EUR one year from today.

You get options like this often in every day life, for example fitness companies offering a discount if you pay your membership fees for two years in advance.

So, which option would you choose? Basically, you are offered a 5% mark-up that needs to reimburse you for the loss of investment (i.e. you can’t invest the 100 EUR in other projects that might give you a nice return), the risk involved (will this person have the liquidity to pay you the 105 EUR in a year from now), and the expected rate of inflation.

For you as a private person, let’s assume you could put the money in the bank and would receive 3% interest. Inflation is currently rather low, let’s expect 1.5%. The person is rich and trustworthy, so no worries about liquidity. With your 3% investment, you’d have 103 EUR in a year. Given 1.5% inflation, the 103 EUR would be worth only 101.46 EUR. So if you’d take the 100 EUR today, you’d have 101.46 EUR in a year. Option 2 would be favorable, as you would get 105 EUR! All these percentages you’re dealing with are combined into the ‘discount factor’.

Of course, there is a lot more to it mathematically, see Wikipedia.org on Present Value.

The simple version: Present Value = Future Value / (1 + discount factor) ^ years

Phew, so where does the NET come in?

Net Present Value is used to calculate the total of all cash flows (in and out) that can be directly linked to your project. If it is positive, good. Otherwise, you might reconsider the investment.

Here is how it works: First, you need to list all the cash inflows and outflows of your projects, sort by year.

Example: The initial cost of your project is 20,000 EUR in year 0, and additional 10,000 EUR in the years 1, 2 and 3. You assume that you will be able to generate cash inflows (for instance through subscriptions) from this project in the years 1-3 of 10,000 EUR each.

year 0: out: -20,000 EUR (initial project investment)
year 1: out: -10,000 EUR (project support)
year 1: in:  +20,000 EUR (income generated from investment)
year 1: net: +10,000 EUR
years 2-3: see year 1

Assuming a discounting factor of 10% (0.10):
year 0: PV = -20.000 EUR / (1+0.1)^0 = -20,000 EUR
year 1: PV =  10.000 EUR / (1+0.1)^1 =   9,091 EUR
year 2: PV =  10.000 EUR / (1+0.1)^2 =   8,264 EUR
year 3: PV =  10.000 EUR / (1+0.1)^3 =   7,513 EUR

The resulting Net Present Value is the sum of the present values above:

NPV = -20.000 EUR
      + 9,091 EUR
      + 8,264 EUR
      + 7,513 EUR
-----------------
NPV =   4,868 EUR
=================

The NPV here is positive and therefore favorable. There are other non-financial and financial investment appraisal techniques available (such as Payback and IRR), but this is a good positive indicator.

Discussion: One thing you see: The later the income generated, the less it is worth (and of course, uncertainty increases the further you look into the future). If you wouldn’t have taken the time value of money into account (i.e. you would have used the un-discounted cash amounts instead of the Present Values), you would have gotten a project return of 10,000 EUR, which looks far more favorable than the ‘correct’ NPV. Please note that this model also has limitations and should not be used as the only appraisal technique.

And now we’re finally turning the corner back to agile – yeah! Imagine you’re running this project using Scrum, and after 6 months you’re already able to get a few subscriptions of your service sold, because you could release the product earlier (maybe with core functionality only, but customers still find it valuable). You could then have an early cash inflow in year 0 already of say 3,000 EUR which boosts your NPV up by exactly this amount from 4,868 EUR to 7,868 EUR.

Agile helps you to achieve cash inflows early. Because of the time value of money, these early cash inflows are a significant help for a financially healthy investment. (Plus, softer factors like reduced risk through early exposition, being earlier at the market, etc.)

Well, you can now put your calculator away again, or read further about this topic (for instance at Wikipedia). Good to know: Excel, Openoffice.org Calc & Co. have built-in NPV and IRR functions.

Although I left out a lot of details, I hope this was still useful. Let me know either way!

February 4, 2010 at 13:07 1 comment

Professionalisierung des Projektmanagements

This post refers to an Austrian post (in German), so it is in German.
Heute ausnahmsweise mal ein Beitrag in deutsch.

Stefan Hagen hat einen interessanten Beitrag zum Thema ‘Projektmanagement unternehmensweit professionalisieren’ veröffentlicht. In diesem Zusammenhang hat er auch ein kleines Crowdsourcing Experiment gestartet, mit einer Mindmap bei Mindmeister. Für am Thema interessierte lohnt es sich sicher, mal vorbei zu schauen.

Da hatte ich nun endlich auch mal Gelegenheit, Mindmeister zu testen. Hat 1A funktioniert, einen Account hatte ich ja schon über XING. Kurzzeitig war auch ein zweiter Nutzer online und hat mit editiert, was super geklappt hat.

Ich werde da in den nächsten Tagen immer mal vorbei schauen um zu sehen wie das Mindmap sich entwickelt. Die Deutschen haben im Internet ja eher den Ruf von Lesern und nicht so sehr aktiv beizutragen, mal sehen was dran ist ;)

January 26, 2010 at 22:05 Leave a comment

The Myth of Managing Change, part II

Back in November of good old 2009, I started with part I of ‘The Myth of Managing Change’. I concluded the first post with the issues often caused by the ‘classic’ change approach. Binney and Williams call this model ‘Organizations as machines’ – Leading. The ‘machine’ model is based on the common view that change can be planned and needs to be done TO organizations, and that ‘they need to change’, being led from a hero leader who knows the way.

The authors then present an alternative model: ‘Organizations as living systems’ – Learning. Here, the notion is that the potential for necessary change is naturally within organizations, and ‘just’ needs to be released. Learning should be encouraged. Care must be taken for keeping a healthy balance between change and stability.

The paper closes with a suggested ‘Leaning into the future’ model which combines Leading and Learning, both contrasting models discussed earlier. The authors conclude that in order for change to be successful, it needs to be driven both top-down and bottom-up. Leaders of change must combine assertive leadership with facilitating and listening skills, being responsive to others. There’s a lot more to it, see the paper or book:

Binney and Williams published their book ‘Leaning into the future’ back in the 90s (you can get a pretty cheap used copy online), and there is an interesting review online.

January 24, 2010 at 21:47 Leave a comment

Agile – giving the business options back

When they hear ‘agile software development’, a lot of people think that this is somewhat of a geeky thing. While there might be admittedly also a lot more fun and fulfillment in agile projects for software developers, there are BIG benefits for the business as well. In this blog post, I’ll have a look at agile projects from the business’ / sponsor’ point of view.

I believe the key to many advantages for the business is the following: The solution is being implemented in executable increments – you get a slice more of your solution with every sprint. You can review and give feedback all the way through. This implies a lot more transparency – rather than pouring money into a black box and waiting for months until you get a glimpse of the final result, you get it from early on, piece by piece. Plus, the most critical, highest priority requirements are implemented first.

Sounds nice? It gets better when you think it through: It gives you options back!

A few examples: You could go to market earlier, when you think you have generated enough value to offer to your customers. Or, you could stop the project, if you discover risks EARLY in the project that would make it too expensive / late / whatever.

It also facilitates informed cross-project prioritization and trade-offs: Imagine you’re a few months into a project, and another high-priority project comes up. In a waterfall environment, you might just be mid way through the implementation phase – a lot of design and implementation efforts have been invested, but no result is there yet. It may be prudent but very painful to stop the project at this point.
Now imagine you had run the project using Scrum or another agile framework: At this point, you would probably have some of the highest priority requirements implemented already. So even if you decided to stop the project (i.e., not implement remaining, lower-priority user stories), you would still have generated business value!

And b.t.w. – Net Present Value (NPV), a common method for financial project/investment appraisal is a great fit with agile approaches! But that’s the topic for my next blog post…

January 11, 2010 at 11:23 5 comments

Reading Tip: Lean and Portfolio Management

Just a brief reading tip today: ‘Lean and Portfolio Management: A Winning Combination in Trying Times’. (Currently, you can download it for free at the link given. Probably for a few days only!)

Here’s the abstract: Struggling with the age-old challenge of too much demand and not enough time and resources to do it all? We all know what the solution is: focus on those things that yield the greatest value for your organization. Fortunately, two major methodologies — portfolio management and lean — have emerged over the past decade that can help you find and maintain that focus. But what if you could take these two proven approaches and bring them together? Would it work? This is the challenge that the author of this Executive Report sets out to investigate.

I really liked the report – a nice read, triggering a lot of thoughts. I’ll probably touch on it again in later posts.

This is one of several really interesting papers on Agile Project Management and Portfolio Management offered on the website of the Cutter Consortium. Most materials are for fee. I recently found another pretty good one. Here is the Summary of ‘The Lean-Agile PMO: Using Lean Thinking to Accelerate Agile Project Delivery’. I am not sure if the full report is still available for free.

Happy reading.

PS – I have no connection whatsoever to the Cutter Consortium ;)

December 30, 2009 at 15:35 Leave a comment

Intelligent Disobedience

There is currently an interesting discussion going on at LinkedIn about a Computerworld article called ‘Intelligent Disobedience’. If you have a minute in-between Christmas panic shopping attacks and shoveling snow, it’s worth a look.

The author (Gopal K. Kapur) states ‘Discussions with project managers about the key causes of failed and challenged projects always raise two primary issues: half-baked or harebrained ideas becoming projects, and excessive scope creep.’ He then draws an interesting analogy between a blind person (sponsor) and their guiding dog (the Project Manager). Aaaahhh… this could be misread! The focus there is NOT the sponsor being blind, but the dog’s behavior ;) The dog needs to disobey in certain situations (i.e., don’t cross the street even if the master says so) in order to protect its master’s health. For me this is yet another case for the modern PM role, which is moving a lot closer to the business.

You can tell from the comments on the LinkedIn discussion that sponsors / customers coming up with not-so-grand or grand but half-baked ideas is quite a common phenomenon. We’ve all been there, haven’t we. As some comments point out, some of the PM disciplines like change management and particularly risk management can be of great value to handle such situations.  And of course, experience helps you dealing with such rather delicate situations. I think it is very important to approach these kinds of suggestions with an open mind. In the end, this is about innovation! Maybe this is a good thought, and all it now needs is a bit of tweaking. It would certainly not be wise to just turn something down because it seems complex at first or ‘just’ because it means changes to your projects. After all, projects are undertaken to gain business value! (And there is this thing called agile Project Management that has been designed to solve a lot of these issues and is proven to be effective in in rapidly changing, innovative environments.)

December 22, 2009 at 21:21 Leave a comment

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