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OVERSIGHT OF TECHNOLOGY PROJECTS BY BOARDS

Oversight of technology projects by boards

11 November 2021

Technology projects can be transformative or disastrous for businesses. When should the board of directors have oversight of a technology project?

I’m a non-executive director on two boards, so I’m very aware of what level of involvement boards should have in the strategic planning and every-day operations of a business. Technology projects that will have a high impact on a business must be carefully managed and must have board oversight.

Failed technology projects

In my last blog post I wrote about an Adelaide-based small business owner in the food manufacturing industry, who had a disastrous experience with an unscrupulous technology vendor. This technology project ended up costing an additional $120,000 over and above the initial estimates from the vendor. It’s had such a large impact on the small business owner that he’s considering court proceedings to sue for damages.

There have been plenty of other such examples of failed technology projects. Another recent example of what can go badly wrong, and how to fix the issues, has been written about Freedom Furniture. This retail business had what should have been a transformative technology project go so badly wrong that it stopped trade. The implementation of an order management system in August 2019 was so disastrous that they couldn’t distribute products to customers, bringing the business to its knees. To fix this problem, a complete redesign and re-architecture of the systems was needed, with external subject matter experts brought in to help. The remediation program took until January 2021 to complete.

High impact projects

Technology projects can have a large impact on a business, with the risk of the project creating transformative change for the better, or having a disastrous impact on the operations of the business.

Projects which require a significant investment of time and money must be well governed to ensure the business gets the most out of new technology.

What defines a high impact project?

Large up-front investment of capital funds to adopt the new technology.
Total cost of ownership over five years (up-front and ongoing costs such as software licences and support fees) is significant.
The project is expected to reap significant benefits, for example improving management of inventory or reducing cost of production.
Employees will be impacted, being required to make significant changes to the way they do their jobs.
Customers and other external stakeholders will see a significant change to the way they do business with you.

I recommend you treat high impact technology projects with the same level of governance that you would for other large projects, for example a project to build and fit out a new warehouse. If your business has a board, there are important project governance principles to consider adopting for high impact projects.

Roadmap of change

Rather than biting off more than you can chew, you should break the changes down into a series of small, achievable projects that form a transformation roadmap. Each project on the roadmap should have a small scope that limits the cost, the amount of change required and the impact to your business. If it's feasible you should also use a pilot project with a very small scope to try out the new technology. Using a roadmap of small projects and pilot projects allows you the opportunity to assess results along the way, and if necessary, pull the plug on the whole program of change without bringing your business to its knees.

Procurement governance

Don’t get carried away by shiny new technology and the sales pitch of a technology vendor that promises amazing transformative technology for your business.

I recommend you look at what is needed for your business – and prioritise the requirements – before looking for a vendor and technology that will be the best fit for your business.

When I’m engaged to assist with selecting new technology, I guide you through these stages of procurement:

Requirements analysis.
I begin by facilitating a workshop and documenting your requirements. Is a new system needed and if so what type of system and what is required of the software?
Vendor selection.
I act as your liaison with vendors, managing the process of finding software that meets your needs, comparing vendor experience and service and comparing the total cost of ownership of each alternative.
Vendor implements software.
You work closely with the vendor to ensure the implementation is achieved in a timely fashion and your data is correctly migrated into the new system. At this stage of the project I sit on the project's steering committee, to keep an eye on progress and advise about any curly issues along the way.
Acceptance testing.
I act as your liaison with the vendor to conduct acceptance testing. Does the software implemented by the vendor meet the requirements they said it would fulfil in their tender response? The final payment to the vendor and approval to go live with the new software is not approved until defects have been fixed and we are happy with the results of acceptance testing.

Board approved business case

All high impact projects, including technology projects, should have a sound business case that is reviewed by the board for approval.

A good business case will clearly explain what introduction of new technology is trying to achieve, the issues it is intended to fix, and why the change is needed now. It will analyse the costs and benefits of three options – what happens if nothing changes, the preferred option and an alternative option for consideration.

Board project oversight

When a business is undertaking transformative change, the roadmap of projects must be on the board’s meeting agenda to manage project oversight. I recommend using traffic-light reporting, so that the board can focus its attention on projects which are at risk of failure. It is important to be decisive about projects that are failing and that must not be allowed to continue.

What’s right for your business?

With over 30 years’ of experience in the information technology industry, and many years of experience on boards of directors, I am perfectly placed to guide you through what’s best for your business when it comes to project governance. Please get in contact today if you’d like to have a chat about how I can help you, I’m always happy to meet over a coffee.