Walter Curd learned about project management the same way some people learn to swim-he jumped in with both feet. In 1994, as the newly appointed director of applications at Fujitsu Microelectronics Inc., Curd learned that he and his colleagues had just 10 months to replace FMI's outworn mainframe computing infrastructure with SAP AG's R/3 integrated business process software.
      FMI, the San Jose, Calif.-based chip-making arm of Fujitsu Ltd., had to adapt to the new SAP environment to keep the company competitive, and that meant restructuring the IS department as well. Curd's IS group had to learn to focus on projects, not programs. "We decided that we could no longer be task-oriented, just programming what users asked for," says Curd. "We had to become project-oriented to configure what they needed." So programmers joined forces with new staff, who hailed from finance, marketing, accounting and operations. Half of the new IS workers had expertise in "soft" areas such as negotiation, problem solving, and process and requirement management; they also had a command of business English, not just techno-speak. And everyone in IS learned a new system, a new process and a new job. "We were building in a system that forced us into project management best practices," explains Curd. "The IS world here changed when we implemented SAP because everything's interconnected. We needed a lot more business and soft skills to see the connections. We could no longer simply take user requests and program them."
      Because of the IS reengineering and the SAP implementation, Curd says, FMI's delivery performance to customers increased by 30 percent. Employee productivity improved by at least 10 percent. All planned IS projects were implemented, compared with TK. And today, all the business units at FMI-and many at the $38 billion parent company in Tokyo-turn to FMI's IS group for project management leadership. For example, Fujitsu's electronic devices division has asked FMI's IS group to help it implement a worldwide order-fulfillment system. "In the bad old days, IS's focus was purely on the system with no view to business processes," says Curd. "Most projects would die on the vine. Now we're seen as change agents and enablers in the company."
      The FMI IS group's radical transformation from glass-house geeks to global gurus is emblematic of the importance of project management in the changing world of IS. CIOs are tiring of the giant sucking sound emitted by too many failed projects. And no wonder: A 1995 study by The Standish Group International Inc., based in Dennis, Mass., revealed that 31 percent of IS projects either weren't completed or didn't meet users' needs. That year, according to the study, corporate America spent $81 billion on failed IS projects, plus another $59 billion on projects that careened over budget and beyond the time estimate and didn't do what they were supposed to do.
      In the face of such dire statistics, companies such as FMI are making project management expertise a core competency. They see it as the future of IS. "Taking the smartest programmer and letting him program doesn't make it anymore," says J. Davidson Frame, a project management consultant and director of the International Center for Project Management Excellence at George Washington University in Washington, D.C. "For an IS department to take its position as the information management leader in an organization, it has to become 'projectized,' meaning it has to change its mind-set to focus on projects, not tasks."
      Nor can IS organizations continue to rely on outsiders to do project work. Rather, they must build up an infinitely valuable, internal intellectual capital-not just through experience and training but also through serious dedication to the theory and practice of project management. IS groups that excel at project management prefer to use their own employees, who already understand how the company's business ticks. "They understand the business in ways that a firm like Andersen Consulting can't," says Gopal K. Kapur, president of the Center for Project Management in San Ramon, Calif.
      Still, project offices are not outsource-proof. Tasks that don't require an understanding of the organization's processes, such as programming or testing, are sometimes passed to consultants. And many companies like to keep their options open, using consultants to help them get started down an untrodden path or to provide fresh ideas. "Even when they build internal expertise, most companies want to maintain a sense of flexibility and a perspective of the outside world," says Frame.

Teamwork Counts
Companies that excel in project management share characteristics of the so-called "project office," a general term applied to a company's source of project management expertise. In the world of IS, a project office is sometimes a distinct group of project management experts and support staff; sometimes it comprises the practices of an IS department as a whole. "Virtually every organization I work with has some kind of project office," says Frame. "Project offices are the keepers of the project management best practices and methodologies. They all have different ways of defining themselves, but whether you call it a rose or not, it's still a rose."
      Generally, a project office consists of cross-functional project teams, each member of which brings a thorough understanding of a specific business or technical area to the table. The teams identify and resolve technical and business issues early in the process. Some team members serve as trouble-shooters or quality controllers; others are in charge of tracking progress, charting project status or providing administrative support. All report to a project manager, a seasoned pro who has already had his or her "front teeth kicked out," says Frame. "These are people who've been in the trenches," he says. "They have tattoos on their tattoos. They are tough cookies who won't be pushed around by vice presidents." The leaders form a single plan for a given project and manage a portfolio of well-organized, carefully chosen projects, each composed of many smaller projects.
      As centers of process excellence, project offices may be called upon by business units within the company to act as internal consultants. The office staff assists project teams with scheduling and reporting and act as mentors who help develop project management methodologies and hammer out a set of best practices. Some "projectized" IS organizations are large and decentralized; in these, IS is viewed as a project management center of expertise. In the handful of companies where project management is elevated to the level of a respected science and a high art, IS teams metamorphose into a powerful business unit that's a far cry from traditional IS hierarchies.

Help from Above
Of course, building a project management discipline into an organization doesn't happen overnight, primarily because people both inside and outside IS will insist it's unnecessary to change the traditional modus operandi. That's why an executive-level champion is critical. Indeed, no project office is possible without the commitment of high-ranking people who have the political prowess and the influence to sell the idea to executives, end users and reluctant IS staff. "We strongly advise the CIO to play an active role in educating business executives on the need for their involvement and support for high-risk projects," says Kapur.
      FMI found its champion in Vice President of Operations Chuck Faust. The company was falling far behind its competitors in getting products to customers, and Faust strongly believed that installing the SAP business process software, and projectizing the organization along with it, was critical to the company's survival. He put his own job on the line to convince the mainframe-oriented execs at the parent company of the need for both SAP and the organizational changes it would require.
      Faust's risk paid off big. As a result of the SAP implementation and the IS group's new project management focus, IS staff was reduced by 20 percent, but "because people had a broader skill set and understood how the software applies to business," productivity rose by 30 percent, says Faust. Subsequent projects-such as a just-in-time inventory system designed for Compaq Computer Corp.-have proved so successful that FMI has won new business. "As a result of our knowledge of project management, Compaq put us on its preferred-vendor list," says Curd. "Now we can leverage our just-in-time system with any vendor. The value of that is far beyond any ROI calculation."

Blurring the Lines
Six years ago, Washington-based Fannie Mae traded in its mainframe for a client/server environment. Like FMI, the company was forced to examine its project management processes, and as a result, it established a project management organization. The world's largest diversified financial company and the biggest source of home mortgage funds in the United States, Fannie Mae and its processes manage nearly $1 trillion worth of outstanding mortgages. Fully 1,000 of its 3,500 employees work for the centralized IS department, which is stretching the concept of the project office. At Fannie Mae, IS project managers and developers-dubbed "business technologists" by CIO Bill Kelvie-operate in both technical and business arenas within the organization. "It's an increasing phenomenon to find business and technology departments becoming more blurred in a corporation," says Kelvie. "Business and technology can no longer be separate and developed in a vacuum. That's why we train our employees in broad-based project management disciplines." (See "Teach Your Staffers Well,")
      IS project managers at Fannie Mae spend so much of their time working in cross-functional teams that they frequently report to more than one master. "We're expanding out of the old glass house," attests Vice President of Portfolio Systems Bill Farrell, a project management team member who reports both to Kelvie and the head of another business unit. "We have a central IS organization but organize our work according to projects in very close partnerships with business units," says Farrell. Sometimes these are direct-line reporting relationships. Every project has a business and an IS lead.
      Hit squads of five to seven project management experts drive projects from inception through completion by following Fannie Mae's enterprisewide project management methodology. Called WHEELS (Ways to Help Evaluate and Execute the Lifecycle of Systems), the methodology combines project management, scheduling, and materials and resource management techniques. Team members apply WHEELS through initiation, scoping and planning, business analysis, technical design, construction, system testing, implementation and rollout of a project. Each phase involves multiple steps and requires specific deliverables, such as completion of a prototype by a given deadline. "We look at WHEELS as a template and adapt it to each project," Farrell explains. "Since every project goes through several levels of WHEELS reviews, there are no surprises at the end."
      The project team meets with users at every phase and develops, tests and refines prototypes to meet user requirements. "IS folks have to work with customers and deal with people who don't know technology," says Farrell. "It forces them into human interaction." For example, a group of users must test all applications and sign off on them before they move into production. That ensures IS won't have to go back and retool the applications to meet user needs. Getting signoff at every stage is a painstaking process, says Farrell, but it's worth it. "If users haven't signed off at the front of the project, it takes months to get [their approval] afterward," says Farrell. "The methodology ensures that all the projects we do are done on time."
      By following the WHEELS template, says Training and Development Director Gus Crosetto, the project teams have become as efficient as airline crews: "We have flight attendants, mechanics, pilots and a ground crew who can come together quickly and know what roles they have to play." And the process works: Of 120 software development projects Fannie Mae's IS group has built in the past six years, 90 percent have been successfully implemented-a brilliant record compared with the industry average of about 30 percent. For a 30-application sample, Fannie Mae calculates that for every dollar invested, it earned revenues or saved more than $4 per year.

Guidance Counselors
While Fannie Mae's project management organization is broad and decentralized, some IS organizations follow a more conservative model of the project office, where a small supporting staff frees project managers to wrestle with political and strategic knots. Kapur likens the role of these kinds of project offices to that of a restaurant's maître d'-they are responsible for the smooth orchestration of projects and they watch out for risks. "This kind of project office keeps an eye on everything and will tell you when a project is a time and money sink," he says. "The staffers support the project manager, use project management tools to look at the vital signs and give early warning if something gets behind schedule."
      One company with such a project office is DHL Worldwide Express of Redwood City, Calif. In 1995, the global shipping company set up a project office not only to prepare for a $4 million Web-based ordering and tracking system but also to help IS manage its projects and provide additional resources to support the company's business groups. (Currently, dozens of DHL's 250 IS staffers are working hard on the Web-based system, which customers will be able to tap into by phone, Internet, modem or DHL's electronic data interchange system.)
      The two people who make up the DHL project office work primarily as consultants and mentors to project managers and their teams; they also manage tools and reports, and they make sure everyone on a project team adheres to a repeatable project management process. Applications Services Manager Rosemary Semprez, for example, provides tools such as the ABT Workbench as well as templates for each project manager to use. "We allow people to manage projects only if they have a good combination of business, technical, leadership and communication skills," says Semprez. "If you're going to practice project management, it also helps if you're a little bit entrepreneurial. You have to be visionary."
      Project managers who are responsible for large, complex and cross-organizational projects report to Dorothy Smith, vice president of applications development. But, as is the case at Fannie Mae, the team members report to both the head of IS and are closely aligned to the business unit sponsoring the project.
      At DHL, practicing project management largely means separating the good ideas from the bad. Project and IS managers must put their ideas through at least three incremental stages of investigation: analysis, proposal and charter. Approvals to move from one phase to another are granted by an executive committee. Indeed, project management at DHL is mostly a matter of playing politics and pushing back, observes Smith. "Users will tell you that a project is a slam-dunk, and you have to show them how many man-days it takes to get software up and running and supported," she says. "You have to give them evidence that managing the project will get them what they want in a timely fashion."
      Though it's too early for DHL to estimate a return on its $150,000 investment in people and software for the project office, the company has already reaped a full payback by preventing wasted efforts, Semprez says. "Before, someone would get an idea and run off and do it," she says. "There wasn't a formal process. If we started 100 risky projects, 90 percent of them failed." But by doing a detailed analysis for risk and impact at each stage, DHL can spend money where it makes the most sense. "It's better to spend $50,000 to find out that a project doesn't make sense than to spend $250,000 on something that won't get used," says Semprez. "Now we take on the most important projects; of these, we believe 90 percent will succeed." The company is now moving into beta on the ordering and tracking system project, for example, and everything is running on time and on budget. "By doing the upfront project work in the planning process, we're able to stay on schedule," she says.
      Additionally, IS productivity at DHL has risen because the staff focuses more on single projects. "Rather than working on a little of this and a little of that, responding to whoever squeaks the loudest or constantly re-creating the wheel, our people are now working consistently on something from beginning to end," says Semprez. "The quality of their work is better."
      And improved quality, as any CIO knows, is the key to improving the company's bottom line.

Bronwyn Fryer is a business and technology writer based in Santa Cruz, Calif. She can be reached at bronwyn@fryer.xo.com.



Teach Your Staffers Well
Successful project management groups are trained, not born
In organizations where project management shines as a core competency, training matters. Really matters. Project managers know more than just how to create pretty Gantt charts using some fancy project management software. At Washington, D.C.-based Fannie Mae, for example, IS personnel undergo weeks of intensive training in project management with a systems management flavor, according to Training and Development Director Gus Crosetto. Besides learning about programming, data structures and database concepts, IS staff members are taught project management skills such as negotiation, leadership and partnering with business units through the company's Business Technologist Program. Another three-year, core curriculum program called Systems Education and Learning Technologies, open to all employees, also includes many project management basics. "The goal behind Fannie Mae's project management training is the imperative to get the job done right the first time," says CIO Bill Kelvie.
      DHL Worldwide Express of Redwood City, Calif., and Fujitsu Microelectronics Inc. (FMI) of San Jose, Calif., subscribe to slightly different project management training models. DHL, for example, is training all of its project people in the Chicago-based Project Management Institute's methodology and the ABT Workbench tool. To date, the company has trained more than 120 people in project management and software estimating principles. FMI has its own mentoring model of training under which newer employees work closely on a project team with more experienced project managers, learning the ropes in a sort of apprenticeship. "In each project, we attempt to move people with more experience up a level and give younger people experience in managing projects," explains Walter Curd, director of applications. "It keeps them interested in learning valuable skills, and the older people like to pass them on."
      Dayton, Ohio-based NCR Corp., a computer equipment manufacturing and network services company, offers its project managers a more formal training route. Headed by John A. Kennel, Vice President of professional business services operations, NCR's worldwide program management group is the project management center of the corporation. A technical staff of 3,500 undergoes formal training in the core principles of project management, as recommended by the Project Management Institute. Even the highest-level executives take an intensive three-day workshop, at the end of which they are tested and certified. The goal is to create a project management culture throughout the company's 130 sites worldwide, according to Kennel, who holds a master's certificate in project management from George Washington University.
      Regardless of the training model they choose, IS organizations that want to succeed need employees with a firm foundation in project management skills. "The idea is to have people understand you when you come into the room so that everyone is using the same terminology and templates for conducting their projects," says Kennel. "You need to have everyone working from the same page regardless of where they are in the world."
-B. Fryer