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October 4, 1999

Project Maps Minimize Risk

continued....page 3 of 3

Illustration by Dave Calver

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Avoid Costly Failures
Medina has practiced this methodology throughout Carlson's call-center implementation, which has been going on for two years. Earlier this month, the company went live on a beta test of an automated travel-reservation system, which was rolled out to about 10 people. This type of micro-level change is exactly what risk management is about, Medina says. "When you try to replace a system from scratch, you run two risks," he says. "First, you don't see its shortcoming because you're creating the system in a vacuum. Second, once it's launched, if it fails, you're talking about an immensely costly failure." That kind of failure, he says, usually costs millions of dollars, whereas failure of small, discrete components costs much less.

Medina says the best advice he can give for managing IT projects and their risks is to know your limitations. "When I'm faced with a deadline that simply can't be met, it may as well be moved up to tomorrow," he says. "That way, the deadline is missed early on, the pressure is off, and we can sit down like reasonable people and make a good, solid, sensible project plan."

At Shaw Industries Inc., a carpet manufacturer in Dalton, Ga., project and risk management are done in-house. Using Lotus Notes, a project proposal is posted to all interested parties, both in the IT department and any business unit that will be affected by the proposed technology. Employees then have a chance to make specific comments. It's a system, says Jim Nielson, Shaw's group manager of IT distributed systems, that has not only kept people in the know, but has helped Shaw avoid costly pitfalls.

"The benefit of this is that the IT staff is aware of a project idea in its earliest state, so you don't have a situation where business folks create a whole plan without knowing what the potential IT impact is down the line," he says. "In fact, 80% of the project proposals posted never take place because IT determined they weren't viable." This system of disclosure, Nielson says, has also saved money by demonstrating where IT can prevent departments from buying and implementing new solutions based on their individual needs when they can tap into existing systems and modify their components.

pie chart When See's Candies Inc., a San Francisco confectioner, decided last year to bolster its already brisk mail-order business with E-commerce, it realized the project had to be extremely well-managed. The risks went well beyond cost or time, says Greg Gibbon, director of MIS. The company's reputation was on the line.

"We take our motto of 'quality without compromise' seriously," Gibbon says. "We really wanted to mitigate the risk of damaging the reputation of the company." Through in-house brainstorming sessions that tapped into long-time experience with the company's culture, Gibbon's project team identified three potential risk areas: security, poor presentation, and product quality.

Straightforward Site
See's Candies, Gibbon says, has never sold its customer lists, and didn't want to be put in a situation where that information could be captured from the Web. It also wanted to build a straightforward, clean site that mirrored how the company presents its shops. To ensure product quality, See's wanted to implement a program to flag orders to regions where priority shipping wasn't available or where the climate didn't permit shipping perishable items. Ultimately, See's built a Lotus Notes database that uses data sources from the U.S. Postal Service and United Parcel Service that examine customer addresses and flags them if they're not in an area to which it's easy to ship.

Managing the relationship with Uptime One, its Web developer, is another way that See's kept its IT risks at bay. "We did a lot of research to find a vendor that had a culture similar to ours, because otherwise we felt they wouldn't understand or adhere to our level of quality control," Gibbon says.

But by far, the best risk-avoidance paradigm that See's or any business can have, according to Gibbon, is CEO buy-in for IT projects. "If you don't have top-level support, you're doomed from the start," he says. "The foresight for our full-featured Web site came from the president and CEO. That makes my job easier because it clears so many obstacles. We had the support so the biggest risk was mitigated immediately."

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