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How CFOs Should Manage IT Project Risk

When it comes to enterprise software projects, it pays to be a pessimist. Even the best CIOs can have a critical project run away from them, damaging the business. In my experience, most major IT projects miss their time lines and cost estimates (and lack promised functionalities) — but not seriously. Some projects, however, go very wrong, with cost overruns of 400% or more with little or nothing to show for it. Structuring the management of projects to detect, correct, or kill runaway projects early is essential to project risk management. CFOs should insist on certain risk-mitigation strategies to manage these potential cost and business risks.

A common refrain in runaway software projects is that the senior-most IT officer did not know things were going very wrong until it was too late. A less-common tune is that, apparently, neither did the CFO.

A CIO I worked for is an example. Tall, good-looking, great hair — if he’d been young, he would have had all the things I lacked. He also had presence and vision. He was impressive.

Unfortunately, he didn't think much about project management. He hired me to fix some products that were buggy and late. The fixes were quite easy and took only five months to complete. Any CIO with a competency in project management could have directed the same changes just as fast.

He left for a CIO position at another organization, where he launched a $65 million system to manage operations. “We’re betting the company on this,” he told one trade journal. They lost.

There was a key technical failure. The requirement was for SAP to perform at a speed unprecedented at the time. He failed to put in place the proper controls for such a technically risky project, and once the extent of the problem was understood, it was too late to do anything about it. His company was soon purchased by a competitor.

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Vendredi 28 Octobre 2011