Organizations struggling with bimodal IT projects should adopt a more outcome-centered approach to project management, according to Gartner, Inc. This will help them manage the different requirements of “slow” (Mode 1) and “fast” (Mode 2) IT most effectively.
“Enterprise project management organization (PMO) and application management leaders are struggling to adapt governance processes to handle new, agile Mode 2 efforts that don’t conform to traditional project management structures,” said Donna Fitzgerald, research vice president at Gartner. “A focus on business outcome and value will bridge the gap between Mode 1 and Mode 2 projects.”
Gartner has identified three best practices to enable PMOs to better manage any type of IT project or program within the portfolio:
Use a Simple Approach to Determine Which Mode Makes Sense for a Project
Determining what Mode to use on a project often has more to do with company culture than anything else.
“While Mode 2 can theoretically be applied to any new project, Gartner recommends a simple construct: consider Mode 1 for systems of record and Mode 2 for systems of differentiation and systems of innovation,” said Ms Fitzgerald.
A system of record is a core system that an organization uses to run its business, such as finance applications or email provision. While a system of record is vital to the operations of the company, it provides no competitive advantage. Systems of record are classically Mode 1. These projects tend to be more knowable both in clear outcomes and clear approaches to achieving these outcomes, which ultimately amounts to doing the process as well as any competitor. Once this is achieved, there is little incentive to improve further or change the process unless conditions or regulations change.
Systems of differentiation are generally Mode 2 projects, because their value resides in providingcapabilities that competitors don’t have. Since the nature of competition is that competitors will copy successful innovations, these capabilities need to constantly improve. The project will likely have a long-term goal that is achieved through several iterative steps that build on one another as success is demonstrated. The exploratory nature of Mode 2 projects is important to their long-term success.
A system of innovation is essentially an experiment. It needs a Mode 2 approach because it is a brand-new idea and there is no established way to plan the details of what will be done.
Define the Intended Business Outcome as the Measure of Project Success
Part of the problem with determining how to measure the value of a Mode 2 project lies in the way we currently measure Mode 1 projects. With a typical Mode 1 project, for example, the sales organization might submit a request and a business case for implementing a customer relationship management system, with a stated benefit of ultimately delivering increased revenue. If the business case were approved, IT would work with the sales team to establish exactly what aspects of the vendor-provided system offered the core critical capabilities, to ensure the system was configured correctly.
Mode 2 projects, however, are explorative and may not have an obvious list of capabilities by which to define their success from the outset. Instead, Gartner recommends identifying a specific business outcome, such as, “Improve lead conversion by X percent based on better segmentation of marketing campaigns,” and agreeing on this while building the business case — all before the project starts. “This scenario works well across both Modes of projects because the outcome defines the scope, and fulfillment of the scope determines completion, rather than just depending on completing a list of requirements,” said Ms Fitzgerald.
Clearly Separate Portfolio and Project Governance for Easier Bimodal Governance
The final area where many PMOs struggle is how to ensure that they maintain a consistent approach toward governing the project once it has begun. “Place responsibility for the project with the people who can practically make things happen,” said Ms Fitzgerald. “Place responsibility for the investment portfolio with the people who have the authority to make decisions across the entire portfolio.”
“Regardless of the Mode, the PMO supports governance through reporting on progress toward successful delivery,” said Ms Fitzgerald. “This criterion remains the same whether the project is replacing a core financial system of record, or building a mobile app that enables consumers to purchase goods from the company. It ensures a consistent approach across Mode 1 and Mode 2 projects.”
More detailed analysis is available in the Gartner report “Effective Governance of Bimodal IT Projects Requires Adopting a More Outcome-Centered Approach.”
Analysts will explore how to manage bimodal IT projects at the Gartner PPM & IT Governance Summits 2015 in Grapevine, Texas on June 1-3 and in London, U.K. on June 8-9. You can find more content and updates around these events on Twitter using the hashtag #GartnerPPM.