Project Portfolio Analysis and Black Swan Events

Rob McIsaac

I recently came across a terrific article in the Harvard Business Review that should be a must read for senior IT managers. The focus of the article is on the growing business complexity against which we are applying technology solutions, the potential for projects to be thrown off track by unplanned (yet in retrospect, foreseeable) events, and the potential for the frameworks we use for data analysis to mask these events. Unfortunately, for companies and managers that get embroiled in the types of projects, the results can be both painful and predictable.

I read this with a certain bit of irony in mind. As a new CIO, I once found that I had inherited an IT organization whose business partners were quite vocal about what a lousy job we did with estimations and on time / on budget delivery. By going back and doing an analysis of our portfolio, I found this wasn’t absolutely or even broadly true. On average, we were pretty good. Even if I looked at percentages of projects, we were surprisingly good. But, what stood out in the hearts and minds of our customers were the anomalies. While on average, results were good, some of the outliers were whoppers! And that’s what people remembered, that’s what framed the perception of the IT group and, ultimately, that had created some unanticipated “turnover.”
The root causes (e.g., poor requirements, massive scope creep, etc.) were lost in the fog of internal combat. That company didn’t have anything as dramatic as the financial debacles highlighted in the HBR article, but it did create real world problems with sales partners, customers, and regulators.

A proactive step that IT managers can take is to arrange for periodic external assessments. These performance reports can clarify the issues and help change the discussion from “IT is terrible” to “IT is generally OK or even pretty good. They blew it in this project, but they’re doing things to fix that.” These assessments can confirm guiding principles established at program inception and provide a mechanism for forcing cross functional engagement on hard issues that might otherwise fail to surface, ultimately to the detriment of the IT organization.

Reading this may cause you to think very differently about your own internal environment and potential corrective actions that can minimize the chance of a Black Swan descending on your team.

Read the full article, “Why Your IT Project May Be Riskier Than You Think,” here.