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Strategic alignment in governance of technology transformations

The challenges of technology-enabled business programs
Budget and time overruns on big resources and infrastructure projects often capture the headlines but in our interactions with senior business executives over the past three years it is often their technology-enabled business transformation program that cause them the most headaches.

The dynamic pace of the technology environment, the expertise asymmetry that can exist between business executives and boards in governance roles and personnel leading and delivering the project, and the ‘intangible’ nature of the project while in development are all reasons executives give us for their level of unease and discomfort. For many of their organisations, governance of technology transformations remains a challenge.

While there were a few issues at play with Queensland Health’s payroll replacement project, a central challenge for all players comprised insufficient governance, with the Commission of Inquiry noting the governance structure was far from clear (Queensland Health Payroll System Commission of Inquiry 2013, para 2.21). There were very many bodies and very many people involved in decision-making about the Project. The Auditor-General observed that some alterations to the governance structures which had been approved by the Executive Steering Committee (ESC) on 19 June 2008 … "were complicated and … ineffective in establishing a shared understanding of stakeholder expectations in relation to the quality of project deliverables”.

This project was to offer accurate pay and rostering advice to Queensland Health staff, yet five years on it cost taxpayers AUD1.2 billion. If this project was viewed as a system to support the needs of over 78,000 staff rather than just an IT project the outcomes would have had a better impact.

One common theme across all project contexts - that is certainly applicable to technology transformations - is that projects that end up going wrong typically do so from the outset rather than having its root cause purely in execution or connected solely to the complexity of the technology. One key question that business executives need to concern themselves with as they carry out their governance role is whether the business is undertaking the right project.

Ask the right questions

So what makes this complicated? In the world of strategy a well-known challenge is that of getting clarity and sufficient definition in a business strategy. Often business strategy comprises a set of high-level statements or aspirations without clear thinking on what the priorities are, how the organization needs to operate if it is to be successful and how performance that extends beyond business-as-usual will actually be delivered. Important questions to address include:

  • How will new customers be reached and existing relationships transformed?
  • How does collaboration and decision-making need to occur and what does this mean for digitization of processes and information flow through the business?
  • What capabilities does the organization require if it is to be successful?

Project concepts need to be developed with this strategic framing of what organisation design is required and how it needs to operate. Too often the project is regarded simply as an ‘IT project’ rather than seen as a means of delivering real business and transformational outcomes.

The US Air Force’s failed enterprise resource planning (ERP) system implementation is a case in point. The Air Force Expeditionary Combat Support System (ECSS) was supposed to be a “transformational” logistics program that would make the US Air Force more efficient and effective. The goal of the program was to replace hundreds of legacy systems, some dating back to the 1970s. But, after nearly a decade of work by the system integrator, Computer Sciences Corporation (CSC), and more than USD1.1 billion spent, the ECSS program was terminated in December of 2012.

Promoting strategic alignment

So what are signs that a right project is being done - there are clear linkages between project outcomes, strategy and vision for the organisation and the project’s impacts on information, processes and customer interaction are consistent with the understood strategic direction. Ideally, these linkages are relatively simple to communicate and people at various levels of the organisation can understand why this project is being done and why now.

Importantly, strategic alignment and asking whether the right project is being done cannot be a one-time consideration for executives at the time of approving the business case and allocating resources to the project team. Governance requires consideration of strategic alignment throughout the project. The risk here is that steering committee meetings get taken up by delivery considerations and the need to deliver to time, cost and scope. These are no doubt important, but so too is a watching brief and ongoing conversations on whether the envisaged strategic benefits are going to envisage. Changes to the competitive environment or shifts in strategic direction may invalidate assumptions underpinning the rationale for the project.

In these situations continuing with the project may need to be revisited. Also, trade-offs between cost or schedule on the one hand, and scope on the other, may have been made by the project team which means that the project is no longer delivering the strategy.

Having ‘benefits realisation’ as regular agenda items on steering committee meetings coupled with project sponsors and the relevant business units presenting on whether originally envisioned benefits are likely to be realised are useful tactics for promoting strategic alignment. Engaging in ‘black hat’ thinking or ‘failure pre-mortems’ can also be useful ways to proactively identify reasons why benefits may not eventuate.

If you broaden the conversation from a focus on cost and schedule to also incorporate discussions on whether project outcomes result in the required organisational design and operation and whether they deliver business value, then you will be on track to be delivering the right project for your organisation.

Professor Suresh Cuganesan

This article was written by Professor Suresh Cuganesan,  Chief Executive of the John Grill Centre for Project Leadership at the University of Sydney and Professor and the University of Sydney Business School.

Suresh specialises in the areas of strategy execution, organisational design and performance measurement. His area of focus is on how public and private-sector enterprises can improve their achievement of policy and strategic goals through being better aligned, collaborative and innovative.