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Thursday, May 19, 2005

Comments

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Brian,

I do agree that the benefits acrue to the PM and them to the organization. But these bebefits aren't traceble to the balance sheet. They're soft and therefore not "bookable" in the cold hard light of finance.

Well Glen I guess we are going to have to agree to disagree. You feel the benefit is ONLY to the PM. I don't disagree that the PM benefits but benefits to the PM (and benefits to a group of PMs like with Project Server) by definition benefit the Enterprise.

Are they the kind of benefits that allow you to fire employees because it replaces them? No, not in most cases. But that does not mean it does not have benefit to the enterprise.

Brian,

I still have some heart burn with the "automation sell" but that's moot now.

One more time for the gipper. PS has value. But it's value is not to the enterprise, it's to the PMs. Not even to the project memebers. Sp the cost has to be absorbed as a conveince cost not a balance sheet return.

So Enterprise Project Management is a hollow term when placed along side Enteprise Resource Planning (ERP) and Enterprise Document Management (EDM) and Product Data Management (PDM). MSFT has rightly positioned PS as enterprise, but the numbers aren't there - yet.

Glen,

My mistake, he was the one that said dangerous but your comments were supporting that in a less 'strong' way.

Im not sure why it is so important to you that I make some kind of confession about Project Server's ROI. You can look at the MS site for what Im sure are several case studies where Project Server had a significant ROI. I know that when I was at Pacific Edge I worked with Schlumberger and they had a ROI in the millions after 1 year.

Is Project Server going to give you the same kind of savings as you describe with Peoplesoft? Is Project Server going to let you fire half your PM staff? Certainly not. I would hope that this was obvious. Does this mean that Project Server is without value? Absolutely not! I have seen it provide value in person, over and over again.

Do I have ROI numbers for each deployment I have done? No. By the time the ROI hits (or doesnt) I, as a consultant, amd out of the picture.

Brian,

Please be careful here, I suggested to Jack that "dangerous" was a bit too much.

Your debate has yet to acknowledge that PS is convenient but does not have a financial benefit in the way an Enterprise System is deployed (ERP for example).

Can you respond to - how does one justify on a financial basis a PS. Labor reduction, FTE reduction, cost avoidance, bookable saves? So far I have heard only that "you don't do finances."

"Not sure how the tools thread got into this. I use a quadrile pad, a pencile and an HP35 myself. I like to own the numbers. "

The tools got into it because it was being said by you and Jack that Project Server is dangerous because there are PMs that think it replaces the human interaction between PM and Team. I was trying to debate that and it then became about ROI for Project Server.

Brian,

Not sure how the tools thread got into this. I use a quadrile pad, a pencile and an HP35 myself. I like to own the numbers.

Not sure about the hammer and saw annology either, what does that have to do with justifying the cost of a PS in an environment that does ask managers to control their budgets, and actually account for the value of the expenses?

Regarding Project and cost, in all the projects I've been on since the late 70's schedule drives cost. Cost and Schedule are inseperable. PS doesn't do a good job here because of the security of the numbers, but that's why cost is held in the cost system and hours are used as the unit of exchange (BCWS, BCWP, ACWP is NOT put in Project cause its EV calcs are sorta lame at best and buggy at worst). We use CSTI in place of MSFT for internal EV and Cost View for the monthly.

But if your working with other peoples money, "someone" has to look after it. If not the PM, then who?

Glen,

I understand your point but to me that is what is wrong with the show me the money crowd. They focus on a dollar sign so hard they miss that an application can save time and money. All they see is that they are paying the same amount for the PM salary. They miss the benefit of the PM being able to do more real work and less busy work.

I guess Im having trouble understanding why you would purchase this application three times if you feel so strongly that it is a $200,000 a pop lost cost. It obviously provided you with some benefit.

This show me the jobs I can cut mentality is why it is so hard to get teams behing an app like Project Server. They are afraid that guys like you will want to fire them once the application is installed. Project Server is not about cutting PMs out of the cycle. It is about making them more efficient at their jobs.

Can I point to a dollar amount that this saves the company? Not directly. Can you point to a dollar amount that having you as a PM saves the company? Can you point to a dollar amount that using a scheduling application saves? Again I ask if, given your feelings on this, if you use a stencil and graph paper to draw your diagrams and if you do your CP and EV calcs by hand or if you use software? You use software because it saves you time and lets you spend that saved time on better things.

Glen,

Regarding project accounting. In my experience Project is NOT up to the challenge of being precise enough to account for $ spent. It is not nearly anal enough about $$. Sure it is OK for forecasting and getting a rough idea of where things stand, but it is not down to the level of where it needs to be.

I've worked where $$$ is everything and also where it is no object. In both cases $ is tracked outside of the Project schedule. Schedules are planning tools. Not accounting tools. I wouldn't write a dissertation in excel either - but I could. I prefer to use tools and processes as efficiently as possible. Sometimes it is good to have both a hammer and a saw.

-Jack

Brian,

Take off your developer hat, put on your financial manager hat. $200K is an "all in cost" for a project server on a moderate to large project.

Servers, desktop upgrades, software (desktop, SQLSRVR, PS, tools, network security devices, training, sunk cost to migrate, operations startup, development for interface to Cost View, development for interface to AMS RTP, development for interface to SAP report writer, corporate IT assessment before "go live."

Final try. PS is a convenience tool, not a cost savings tool. If so find me the bookable saves in dollars to the budget? It can make PM more efficient, but it can't reduce the footprint of PM's you still need the same number, if not more cause thay have to fool with PS.

You assert they get more work done, the challange (put on your finance hat) is how do I measure that in dollars. The projects got out the door just fine before project server. They built and flew dozens of machine in the absence of PS, they wrote and installed $12M a year worth of software without PS.

PS is NOT a business enabler in the way an ERP system is. When we installed PeopleSoft, AP/AR, payroll, purchasing, and HR all had head count reductions. So did the IT operations folks. That's $150K/year/head. We broke even on PeopleSoft in year 4. Even year after that we "made money" by owning PeopleSoft.

This is Enterprise Systems ecomonics, not technology. Put on your finance hat.

Glen,

"What's missing from PS is a real report writer. Cost View has one, the finance people write and rewrite reports every month beacuse the business needs change. They have to change. If they don't change you work for McD's and even there they change. So in your scenario does the chargable hours of the PM go measurably down? Does she go home earlier? Probably not, beacuse there is more work to fill the gap."

I agree that Project Server needs a report writer application but I disagree with your assertion that standard reports NEVER happen. I have seen them happen at literally dozens of companies. I have written them and I have seen them work. I have seen it save time.

And of course the PMs do not go home early. Do not be silly. That is my entire point. No they dont go home. They get more work done! That is the point. They dont have to spend time with things that can be automated so that they can spend more time doing things that cannot\should not be automated.

Brian,

Rejecting the finance view doesn't solve the problem - it's till there - budget is fixed. If I have a fixed annual budget and I'm the CIO or PMO (having been both), and MSFT or PCubed comes and says "hey buy this and it'll make your life eaiser," then how do I make the decision to buy? What positive budget impact occurs?

For an ERP system this is exactly the "smell test" that is needed, otherwise $20M to $30M (unfavorable) flows to the bottom line, and the board asks WHY? Its not the only test, but its a start.

For something like PS, the numbers are much smaller, but the "smell test" should be the same or something close - answer the financial questions right and you'll be in business longer. This is not to say I won't buy - cause I have three times. But when the budget review comes around at the end of the year - which it does every year, I should have some "numbers" that explain why I spent $200K of the companies or customers money - what did they get for the investment? The CFO I work with like hard numbers, soft saves are nice AFTER the hard saves.

Regarding to your scenarios. From my experience in aerospace, DOE, heavy construction, and now pharms, there is NO such thing as make the report once. It doesn't happen. It would be wonderful if it did, but it doesn't.

What's missing from PS is a real report writer. Cost View has one, the finance people write and rewrite reports every month beacuse the business needs change. They have to change. If they don't change you work for McD's and even there they change.

So in your scenario does the chargable hours of the PM go measurably down? Does she go home earlier? Probably not, beacuse there is more work to fill the gap. The FTE count remains the same, the cost burden to the project is the same.

Convenience? Absolutely convenient. Bookable saves, not sar far? As the CFO or CXO, have convenience is nice if I have the budget margin to spend on conveience. But finding hard saves is much much better.

Glen,

"Tell me the names of the people you're going to let go when we install Peoplesoft (or at least tell me the numbers of heads you're not going to hire). Ask and answer that question in the context of Project Server? Otherwise its a convenience and therefore is an unrecoverable sunk cost - speaking my MBA-Finance vocabulary."

This is why I reject much of the pure finance side of what MBAs have to say. :-) It is not just about killing head count. What about making the existing employees, like the PM, more efficient in what they already do, allowing them to spend more time on higher value things? What about PMs not spending time hand entering actual work values but instead spending time dealing with issues and talking with team members about things that are going on? What about the PM NOT spending 10 hours a week creating one-off reports but instead creating it once and having the managers that consume it getting that report from a live web page? In some large teams this equates to the PM NOT needing to have an assistant but in most it just means the PM has more time to spend doing the real work of managing the project, instead of manging data and managing reports.

Jack,

Project Accounting is the starting point for any good project management improvement process. I know there are other paradigms - resource management, task management, seqeuencing of deliverables. But for us in the business of spending the governments money, project accounting (cost accouting) this is where it starts and ends. Same for those who spend other peoples money. I've been around projects that had not concern about the money - for all the right reasons. The money was managed by someone else.

The question here - I think - is twofold:

1. Can Project Server make our lives easier? Maybe. My experience is PS solves some problems, creates others. The net net may be easier.

2. Can Project Server earn its keep? Good question. So far I haven't been able to justify PS on a financial basis. Straight hard saves ROI. No soft touchy stuff, US dollars in the bank.

Here's how ERP-style projects are justified in any good IT shop.

Tell me the names of the people you're going to let go when we install Peoplesoft (or at least tell me the numbers of heads you're not going to hire).

Ask and answer that question in the context of Project Server? Otherwise its a convenience and therefore is an unrecoverable sunk cost - speaking my MBA-Finance vocabulary.

A nice unrecoverable sunk cost, one that provides convenience, but a sunk cost never the less. Maybe the cost of doing business. But as you suggest, let's call it a cost not a benefit.

Glen,

You are really getting locked into specifics on this one. OK NOT 100 people. How about 30? How about 10 but the organization has 20 of these projects going at once. (And video game projects do approach 100 person teams on occation and will do so more frequently in the coming year or so.) The 100 person team was an example. It was not meant as a full case study where we debate team structure and deliverable details.

Again, it is an exmaple of how a PM could spend time gathering data and hand entering it into the schedule or they could spend it having meaningful conversations with resources. This is not something that most organizations will put a dollar value on because most organizations dont understand the value of either of these things in the first place. They just expect the project to come in on time an they dont care how much time the PM spends on which task.

You say it is an expense in exchange for convenience. Sure it is an expense but that convenience does have a value but like I said it is a hidden value because it allows the PM to do more of one undervalued thing in order to do more of another undervalued thing.

It saves the PM time hand entering stuff and manually creating reports. This time can be spent on things that add more value to the project. You find the ROI in this the same way you find the ROI in using scheduling software to begin with. From your stance on this are we to assume you use graph paper and a stencil to create you network diagrams? Should we assume that you do the forward and backward passes on yoru spacecraft project by hand because all a scheduling application does is cost money for the sake of convenience? :-)

Brian,

Some more thoughts. Yes its more convenient as you state above, but the balanced sheet saves aren't there (at least formo what I've seen). It's an expense in exchange for convenience. This is not the case for SAP or Oracle or Peoplesoft (oh yea they're the same now). That expense has direct savings to the balance sheet. Bookable saves is the operative word when talking about enterprise services. Otherwise the "as is" solution will remain in place, when the Portfolio Management question is asked "when do we breakeven on this investment?"

Brian,

If you have a 100 person team (a single project with 100 developers on it), you've likely got problems much bigger then those solved by Project Server. Could you describe a bit of the actual project structure?

How many people work on a single entity - a budgeted deliverable that could be called a project.

The reason I ask is a typical spacecraft project budgeted at $350M would have 100 to 200 people depending on the phase. A 100 person software project? A single project?

In this 100 person projects, where is the PM? What role does the PM play? What does the plan look like? In terms of deatails, deliverables, meaureable outcomes, status reporting entities?

Glen,

Convinience but not substance? In the example I gave about getting detailed status from a 100 person team each week. Sure a PM could do it but the cost is NOT getting the time to have the kind of real, substantial conversations with the team that you are saying (and I agree) are so important. The same convenience vs. substance can be said for even using scheduling software at all. You know how to do a forward and backward pass and you have a roll of paper, a pencil and a stencil. Why do you need a schedule app for your 20,000 line project? Why? Because it saves you time. It is more convenient! :-)

Sure you could do cross project resource pools and such and get some of the data that Project Server gives but this means ensuring you have someone on staff that REALLY gets Project and how it does file based pooling. Not super common. It means that the PM gets to spend more time creating reports for management than managing the project. It means that instead of pulling up a dialog and getting how available all the other resources in group X or all the C# devs are next month and getting in the time it takes to load a web page the PM gets to do it by hand.

Again, I think we are straying from the actual convesation here and getting down into the trouble area of coming up with a ROI on something that nobody ever measures: the amount of extra time you have in your day to do things that most orgs did not think were important in the first place so would not miss if you did not have the extra time! LOL

The original thought here was covering the question around if enterprise PM apps were dangerous because they dont do a good job of replacing human interactions. My position is that it is not a fair question because they were not ever designed to replace that interaction. Tehy were meant to change the nature and quality of that interaction. Only a bad PM would assume that because they had an electronic timesheet that they no longer need to talk to their teams. This kind of PM is the danger, not the tool they use.

Brian,

They do add value, but so far the value is one of convenience not substance. I say that from experience on two large program ($350M and $2.2B).

This is a challnage to EPM, since the ERP domain went through the same maturing process. "We have to have one." Then the payback approach set it.

For a Cost Management system - say Cost View - the paybacks can be found. Centralized budget, forecasting against actuals, and the like.

I'm on the "jury's still out" for the impacts like SAP or Cost View. The expense of Project Server is an order of magnitude lower, but I'd be very interested to see a balance sheet view of the pay backs beyond the soft saves of efficiency.

Resource planning? Maybe but NIKU does a better job.
Web access? OK, but can I book that on the balance sheet
Cross Project coordination - maybe, but I can do that from a file server.

I'm a fan of Project Server, but I alos live in the hard nosed world of balance sheet paybacks.

So the last sentence of "add to the overall process," has yet to be dollarized.

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