Project Management - When Failure Is Not an Option

By Meridith Levinson
Thu, June 01, 2006

CIO

John Parker had no illusions about the considerable challenges awaiting him as CTO of A.G. Edwards. The management team had painted a clear picture during his job interviews in fall 2001. IT costs were too high. Projects dragged on for years, if they were completed at all. Some had derailed so dramatically that the St. Louis–based retail brokerage firm had to write them off. Poor project management was taking a toll on the bottom line.

The executives told Parker they needed a CTO who could overhaul the IT department and ensure that a planned five-year, $196 million migration of a mission-critical mainframe system would proceed smoothly. They simply couldn’t afford to have a project of that magnitude follow IT’s usual MO, where systems developed in isolation—sometimes over the course of years—often failed to meet the company’s requirements once delivered. It just couldn’t happen.

What Parker found after he was hired matched what he had heard during his interviews: Almost half of all projects were late and over budget. Most cost 54 percent more and took 54 percent longer than original estimates. And he found evidence of the write-offs. "We were running hundreds of projects over the course of a year, and 1 to 2 percent of them would have been written off and the write-offs would have been significant," says Parker, now CIO. In 2002, A.G. Edwards wrote off $46 million worth of software investments, according to a company filing with the Securities and Exchange Commission.

Fast-forward to 2006. The company’s project success rate (defined by the number of projects that arrive on time, within budget and that deliver the expected business value) has soared from 54 percent in 2002 to 88 percent today. Improved project management has had a dramatic impact on the company’s financials: The SEC filing shows that IT and telecom costs declined from $295 million in 2002 to $241 million in 2005, even as investment in the mainframe migration continued. Meanwhile, net profits jumped from $71 million in 2002 to $186 million in 2005.

Parker achieved this project management turnaround by transforming how IT operated—from its interactions with the business to the structure of its project management office. Experience has taught him there’s more to running successful projects than methodologies and tracking software, which is where most IT organizations get hung up. Successful projects hinge on sound leadership and constructive relationships between IT managers and the business. So Parker set out to improve his department’s track record by working with the company’s top executives to identify the most important projects and by providing all IT managers with leadership training to improve their credibility with the business.

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