In-Depth

Successful Project Management: Best Practices of World-Class Companies

Researchers shed light on what companies with successful projects do right

• By Stephen Swoyer
• 06/24/2003

The Hackett study differentiated “average” companies from so-called “world-class” companies, as determined by the research firm’s Business Value Index (BVI). World-class companies were those that scored in the top 25 percent in both efficiency and effectiveness.

Hackett found that, on average, only 21 percent of “average” companies rate their IT organization as having a high ability to react rapidly to changes in business goals and market conditions.

The research firm found that most groups aren’t very good at seeing how completed projects measured up against preliminary ROI estimates after completion: Only 25 percent of “average” companies attempt to validate the business case for projects after they’re finished, a step that Hackett identifies as critical—among “world-class” IT organizations, at least—to track and improve the quality of IT activities.

Not surprisingly, Hackett found that companies that are supported by “world-class” IT organizations do much better in these areas. Overall, the research firm found, world-class IT organizations are able to deliver more value to their companies without significantly increasing IT costs per end-user.

They’re able to do this, Hackett says, because they focus and implement best practices that pertain to at least four general areas:

• Automation of routine tasks

• Improved effectiveness through accountability and centralized (enterprise-level) control of IT

• Enhanced management discipline and visibility by utilizing a formal Project Management Office

• An overall focus on meaningful performance measures, including tracking IT costs per end-user rather than by revenue

In their report, Hackett researchers Allen Frank and Scott Holland identify a variety of best practices in all four areas, including the elimination of redundant activities and the automation of routine processes, which they say can generate enormous competitive advantage by reducing costs and freeing up personnel for higher-value-adding activities.

Another best practice identified by the two researchers is enterprise-level management of IT, which helps to ensure that an organization’s IT strategy is synchronized with its business strategy. Their report also identifies a familiar problem in many enterprises: The business value of a project (in terms of tangible ROI or other benefits) is almost never validated after implementation. For maximum ROI, both researchers say, the strategic value of IT projects should be documented before funding decisions are made and verified after implementation.

The Hackett report also stresses accountability in enterprise project management. According to Frank and Holland, having a single point of accountability for setting IT strategy and policy across the enterprise is necessary in order to balance business and functional needs with the needs of the enterprise as a whole. At world-class organizations, the two researchers found, this person is usually culled from the most senior management committee of the company.

The Hackett study surveyed companies with annual revenues of between $200 million and $28 billion, and with wildly disproportionate end user bases (from a mere 700 to 85,000). Nevertheless, the two researchers say that the best practices they’ve identified are universally applicable. As a result of declining IT costs, Frank and Holland argue that best practices that were once available only to the very largest firms are now practicable by small firms.

In this regard, the researchers warn that companies which persist in seeking improvement ideas only from within their own industry peer groups may risk overlooking proven strategies that have worked successfully other organizations.