PROJECT GOVERNANCE WHITEPAPER FIVE RULES FOR SUCCESS

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1 WHITEPAPER PROJECT GOVERNANCE FIVE RULES FOR SUCCESS This paper offers five principles that will contribute to a successful project governance, one which supports the strategic goals and objectives of your ERP project.

2 INTRODUCTION By now, people are quite familiar with the concept of project governance. It is indeed rare to encounter an ERP project, which has been initiated without a project charter of one form or another. Yet, if you ask any project team member how much they know about the governance model of their project, most people will refer to it as the weekly reporting requirements, and not much more. However, project governance is much more than just a set of regulatory rules. An ERP project touches all project stakeholders, inside and outside the project team itself. Furthermore, an ERP project is strategic by nature, and it therefore follows that its main objective should be to support the corporate strategy. DEFINING THE RULES OF ENGAGEMENT Through the course of a mid to long-term ERP implementation, however, it is impossible to keep the focus on strategic objectives without a strong link to corporate governance. Project governance can therefore be thought of as the link between corporate governance and project management. In more mature organizations, the corporate governance model is often well documented and communicated. In less mature organizations, the project management team must provide this high level of clarity. Project Governance defines the rules of engagement of each stakeholder of the project guiding them towards a set of common objectives. Basic questions such as Why (I need to do this), How (will I deliver) and Whom (will this benefit) are essential. If it is not tightly linked to corporate governance, the project has failed before day one. The only problem is that by the time you discover the gap, it will be too late. This document gives project stakeholders five key rules for defining and executing a project governance that will help them avoid common pitfalls and support the goals and objectives of the project. 2

3 FIVE PRINCIPLES FOR SUCCESS- FUL PROJECT GOVERNANCE 1. AVOID VENDORS THAT CLAIM THEY WILL ADAPT TO ANY CUSTOMER S MODEL Vendors who claim they will adapt to any customer s model simply do not have a strong enough culture to offer a committed partnership. The project management team must ensure that the project culture will not differ significantly from the culture of the organization. There will, however be at least two organizations whose corporate governance, or culture, you need to consider: that of your own organization and that of your vendor. Once you understand what you have to work with, then you can tie the vendor s culture to that of your own organization s. Project management is largely about communication, and both organizations must understand where they meet and where they differ in order to bridge the gap between those differences. Of course, there are cases where the gap between vendor and customer culture is simply too large to bridge, but at least this way, you discover the breach before you are too far into the project. If, on the other hand, you push all the responsibility on to the vendor and expect them to accommodate you, you might only discover that your cultures are incompatible after it is too late. Vendors who claim they will adapt to any customer s model simply do not have a strong enough culture to offer a committed partnership. 3

4 2. STRONG COMMUNICATION IS A PRECONDITION FOR SUCCESS In the vast majority of cases, people who feel empowered will go beyond their area of influence to ensure project success. When establishing the project governance, the project management team must communicate the rules clearly. When stakeholders look for rules during the course of a project, the degree of difficulty cannot outweigh the motivation of the stakeholder. The project manager must make sure it is easily accessible, is worded in simple terms and does not lead to ambiguity. The project governance should be communicated to all stakeholders, and it should be announced that the communication will be followed by a second communication of clarification based on feedback. This two-way communication is important in order to ensure that the message is understood, to encourage feedback and to gain acceptance. Anyone who has raised teenagers will agree that making sure a rule is understood does not mean it has been accepted. Furthermore, any attempt to implement rules whose validity or rationale is not accepted is bound to fail. Forced labor aside, it is a law of nature that people need to understand why they are required to do something in order to feel motivated. This axiom is even truer in the case of senior employees. Nobody wants to perform a task if they are not convinced of its usefulness to their organization. The project manager must therefore ensure that each stakeholder knows how their work is contributing, not only to the project objectives, but also to the strategic objectives of the organization. They need to be thoroughly convinced that the project governance as defined is critical to the project success. They also need to be told that should they find a better way to engage in the project, their voice will be heard. 4

5 3. CLEAR ACCOUNTABILITIES EMPOWER PEOPLE The rules of engagement do not take reputation, title or politics into consideration. While adhering to project governance, stakeholders must have a clear understanding of roles and responsibilities. Duplicate responsibilities should be absolutely avoided, and shared responsibilities should be encouraged as long as they favor interdependencies. While shared responsibilities are acceptable, accountability can only lie with one individual and that is where all credit or blame must end. Many people think that when one is accountable, that is where most of the risk lies. This is patently untrue. After all, in order to be accountable, one needs to be empowered. The true meaning of empowerment is, however, often misunderstood in many organizations. Empowering a manager means delegating full decision-making authority to that individual, yet at the same time, accepting de facto ownership of the decisions made by that person. This is one of the most powerful weapons a project manager can have in their arsenal. In fact, in the vast majority of cases, people who feel empowered will go beyond their area of influence to ensure project success. In some organizations, you will see people trying to encroach on one another s areas of authority because they want to gain prestige and personal benefit. Empowered people, on the other hand, will overstep their level of authority because they have understood that a colleague s failure will be their own. This is not to say that everybody is responsible for everything, and again, responsibilities must be clearly defined. What it does mean is that roles and responsibilities are documented and shared, not only with the responsible people, but with all stakeholders, so the whole team knows who is doing what and everyone is motivated to contribute. 5

6 4. ROLES MUST BE TRANSPARENT AND CLEAR TO ALL STAKEHOLDERS. Good project governance is defined at the project level, which means the rules of engagement do not take reputation, title or politics into consideration. Yes, there will always be project politics; they cannot be avoided, and you will need to address them in due time. Nevertheless, when defining project governance, you must leave politics out. A project s organization is usually a matrix, and in matrix organizations, it is quite common to find various levels of management working on the same project. The project manager will find it easier to construct the project governance by role. Roles should be assigned by keeping project goals and objectives firmly in sight, and as mentioned with no regard to names or titles. Once the project governance has been created, it is time to assign individuals to roles, not based on who s who, but based on skills and availability (in that order). Project governance and rules must be applicable to all stakeholders in the project, totally transparent, and presented in such a way that each stakeholder understands and buys into the governance. 6

7 5. THE MANAGEMENT TEAM SHOULD DEFINE ETHICS BASED ON ACCEPTED NORMS. Corporate Social Responsibility, politically correct branding and legal risks aside, there is another reason most professional project management organizations enforce a code of ethics. It is because project teams need to work together on the front line of a project, and in order to work on a practical level, they need to find the common ground for what is an acceptable mode of getting things done. Otherwise, the path to success becomes a dead end. As Project Management Professional, Ralph L. Kliem puts it, an ethical lapse either in judgement or action - occurs where the real work is done, where strategic dreams, so to speak, become operational. 1 This is why the management team should not try to define what is right or wrong, but rather, to find a good working norm, which will be accepted by all. In the course of a project, you build relationships. With vendors. With consultants. With colleagues. It is important to remember, however, that not everybody comes from the same background or shares the same values. Good project governance defines accepted behavior for the stakeholders. THE BOTTOM LINE Project governance functions as a link between corporate governance and project management in order to provide guidelines for communication, responsibilities and ethics, which support an ERP project that in adding strategic value. STRONG TEAMWORK AND COMMUNICATION BETWEEN YOUR VENDOR, YOUR ORGANIZATION AND THE STAKEHOLDERS IS A PRECONDITION FOR SUCCESS CLEAR ACCOUNTABILITIES EMPOWER AND MOTIVATE PEOPLE TO CONTRIBUTE MORE TO THE PROJECT OPERATIONAL AND ETHICAL RULES MUST BE TRANSPARENT AND CLEAR TO ALL STAKEHOLDERS 1 Ethics and Project Management, page XVI, Aurbach Publications,

8 WHAT S NEXT? If you want to learn more about project governance, contact us at MarketingTeam@pipol.com CONTACT PIPOL Pipol A/S Christianshusvej 193 DK-2970 Hoersholm Denmark P: