You are a Senior Partner of Sthembiso, Venter & Rahul Strategic Project Management Consultants (SURSPMC) (Pty) Ltd, an international consulting firm with a strong base in the USA, South America and Africa. FNB has approached SURSPMC (Pty) Ltd directly based on its track record as a leader in Executive / Strategic Project Management expertise. The President of FNB has directly approached the Johannesburg office of SURSPM to allow you specifically (based on your previous assignments successes) to lead a SURSPMC team and help FNB to understand the challenges at hand to investigate why the MIS Development Project failed. Read the Case study: MIS AT THE FIRST NATIONAL BANK very careful below and with a clear focus on Executive Project Management fundamentals present to FNB with a full report on why the MIS Development Project failed and what FNB should do to avoid similar situations like this in future. Please note that credit will be given for demonstrating a clear understanding of Executive Project Management principles. MIS AT THE FIRST NATIONAL BANK MIS Project Management at First National Bank (FNB) During the last five years, First National Bank (FNB) has been one of the fastest-growing banks in the Midwest. The holding company of the bank has been actively involved in purchasing small banks throughout the state of Ohio. This expansion and the resulting increase of operations had been attended by considerable growth in numbers of employees and in the complexity of the organizational structure. In five years the staff of the bank has increased by 35 present, and the total assets have grown by 70 present. FNB management is eagerly looking forward to a change in the Ohio banking laws that will allow state-wide branch banking. INFORMATION SERCES DIVISION (ISD) HISTORY Data processing at FNB has grown at a much faster pace than the rest of the bank. The systems and programming staff grew from 12 in 1970 to over 75 during the first part of 1977. Because of several future projects, the staff is expected to increase by 50 present during the 2017 _ MBLEPMY 3 next two year. Prior to 1972, the Information Services Department reported to the executive vice president of the Consumer Banking and Operations Division. As a result, the first banking applicants to be computerized were in the demand deposit, savings, and consumer credit banking areas. The computer was seen as a tool to speed up the processing of consumer transactions. Little effort was expended to meet the information requirements for the rest of the bank. This caused a high-level conflict, since each major operating organization of the bank did not have equal access to systems and programming resources. The management of FNB became increasingly aware of the benefits that could accrue from a realignment of the banks organization into one that would better attuned to the total information requirements of the corporation. In 1982 the Information Services Division (ISD) was created. ISD was removed from the Consumer banking and Operations Division to become a separate division reporting directly to the president. An organizational chart depicting the Information Services Division is shown in Exhibit 1. PRIORITIES COMMITTEE During 1982 the Priorities Committee was formed. It consists of the chief executive officer of each of the major operating organizations whose activities are directly affected by the need for new or revised information systems. The Priorities Committee was established to ensure that the resources of systems 2017 _ MBLEPMY 4 and programming personnel and computer hardware would be used only on those information systems that can best be cost justified. Divisions represented on the committee are included in Exhibit II. The Priorities Committee meets monthly to reaffirm previously set priorities and rank new projects introduced since the last meeting. Bank policy states that the only way to obtain funds for an information development project is to submit a request to the Priorities Committee and have it approved and ranked in overall priority order for the bank. Placing potential projects in ranked sequence is done by the senior executives. The primary document used for Priorities Committee review is called the project proposal. THE PROJECT PROPOSAL LIFE CYCLE When a user department determines a need for the development or enhancement of an information system, it is required to prepare a draft containing a statement of the problem from its functional perspective. The problem statement is sent to the president of ISD, who 2017 _ MBLEPMY 5 authorizes Systems Research (see Exhibit I) to prepare an impact statement. This impact statement will include a general overview from ISDs perspective of: The project Proposal Life Cycle Project feasibility Project complexity Conformity with long-range ISD plans Estimated ISD resource commitment Review of similar requests Unique characteristics/problems Broad estimate of total costs The problem and impact statements are then presented to the members of the Priorities Committee for their review. The proposals are preliminary in nature, but they permit the broad concept (with a very approximate cost attached to it) to be reviewed by the executive group to see if there is serious interest in perusing the idea. If the interest level of the committee is low, then the idea is rejected. However, if the Priorities Committee members feel the concept has merit, they authorize the Systems Research Group of ISD to prepare a full-scale project proposal that contains: A detailed statement of the problem Identification of alternative solutions Impact of request on: User division ISD Other operating divisions Estimated costs of solutions Schedule of approximate task duration Cost-benefit analysis of solutions Long-range implications Recommended course of action Exhibit III. The project proposal cycle 2017 _ MBLEPMY 6 After the project proposal is prepared by systems research, the user sponsor must review the proposal and appear at the next Priorities Committee meeting to speak in favour of the approval and priority level of the proposed work. The project proposal is evaluated by the committee and either dropped, tabled for further review, or assigned a priority relative to ongoing projects and available resources. The final output of a Priorities Committee meeting is an updated list of project proposals in priority order with and accompanying milestone schedule that indicates the approximate time span required to implement each of the proposed projects. The net result of this process is that the priority-setting for systems development is done by a cross section of executive management; it does not revert to default to data processing management. Priority 2017 _ MBLEPMY 7 setting, if done by data processing, can lead to misunderstanding and dissatisfaction by sponsors of the projects that did not ranked high enough to be funded in the near future. The proposal cycle at FNB is diagrammed in Exhibit III. Once a project has risen to the top of the ranked priority list, it is assigned to the appropriate systems group for systems definition, system design and development, and system implementation. The time spend by systems research is producing impact statements and project proposals in considered to be overhead by ISD. No system research time is directly charged to the development for information systems. PROJECT LIFE CYCLE As noted before, the systems and programming staff of ISD has increased in size rapidly and is expected to expand by another 50 percent over the next two years. As a rule, most new employees have previous experience and training in various systems methodologies. ISD management recently implemented a project management system indicated to providing a uniform step-by-step methodology for the development of management information systems. All project work is covered by tasks that make up the information project development life cycle at FNB. The subphases used by ISD in the project life cycle are: 1. System information (a) Project plan (b) User definition (c) System definition (d) Advisability and development 2. Systems design and development (a) Preliminary systems design (b) Subsystems design (c) Program design (d) Programming and testing 3. System implementation (a) System implementation (b) System test (c) Production control turnover (d) User training (e) System acceptance PROJECT ESTIMATING The project management system contains a list of all normal tasks and subtasks (over 400) to be performed during the life cycle of a development project. The project manager must examine all the tasks to determine if they apply to a given project. The manager must insert additional tasks if required and delete tasks that do not apply. The project manager next estimates the amount of time (in hours) to complete each task for each sub-phase of the project life cycle. The estimating process of the project management system uses a moving window concept. ISD management feels that detailed cost estimating and time schedules are only meaningful for the next sub-phase of a project, where the visibility of the tasks to be performed is quite clear. Beyond that sub-phase, a more summary method of estimating is relied on. As the project 2017 _ MBLEPMY 8 progresses, new segments of the project gain visibility. Detailed estimates are made for the nest major portion of the project, and summary estimates are done beyond that until the end of the project. Estimates are performed at five intervals during the project life cycle. When the project is first initiated, the funding is based on the original estimates, which are derived from the list of normal tasks and subtasks. At this time, the sub-phases through the advisability study are estimated in detail, and summary estimates are prepared for the rest of the tasks in the project. Once the project has progressed through the advisability study, the preliminary systems design is estimated in detail, and the balance of the project is estimated in a more summary fashion. Estimates are conducted in this matter until the systems implementation plan is completed and the scope of the remaining sub-phases of the project is known. This multiple estimating process is used because it is almost impossible at the beginning of many projects to be certain of what the magnitude of effort will be later on in the project life cycle. FUNDING OF PROJECTS The project plan is the official document for securing funding from the sponsor in the user organization. The project plan must be completed and approved by the project manager before activity can begin on the user requirements subphase (1b). An initial stage in developing a project plan includes the drawing of a network that identifies each of the tasks to be done in the appropriate sequence for their execution. The project plan must include a milestone schedule, a cost estimate, and a budget request. It is submitted to the appropriate general manager of systems and programming for review so that an understanding can be reached of how the estimates were prepared and why the costs and schedules are as shown. At this time the general manager can get an idea of the quality of systems and programming resources required by the project. The general manager nest sets up a meeting with the project manager and the user sponsor to review the project plan and obtain funding from the user organization. The initial project funding is based on an estimate that includes a number of assumptions concerning the scope of the project. Once certain key milestones in the project have been achieved, the visibility on the balance of the project becomes much clearer, and re-estimates are performed. The re-estimates may result in refunding if there has been a significant change in the project. The normal milestone refunding points are as follows: 1. After the advisability study (1d) 2. After the preliminary systems design (2a) 3. After the program design (2c) 4. After system implementation (3a) The refunding process is similar to the initial funding with the exception that progress information is presented on them status of the work and reasons are given to explain deviations from project expenditure projections. A revised project plan is prepared for each milestone refunding meeting. During the systems design and development stage, design freezes are issued by the project manager to users announcing that no additional changes will be accepted to the project beyond that point. The presence of these design freezers is outlined at the 2017 _ MBLEPMY 9 beginning of the project. Following the design freeze, no additional changes will be accepted unless the project is re-estimated at a new level and approved by the user sponsor. SYSTEM QUALITY REVIEWS The key element in ensuring the user involvement in the new system is the conducting of quality reviews. In the normal system cycles at FNB, there are ten quality reviews, seven of which are participated in jointly by users and data processing personnel, and there of which are technical reviews by data processing (DP) personnel only. An important side benefit of this review process is that users of a new system are forced to become involved in and are permitted to make a contribution to the systems design. Each of the quality review points coincides with the end of a subphase in the project life cycle. The review must be held at the completion of one subphase to obtain authorization to begin work on the tasks of the nest subphase of the project. All tasks and subtasks assigned to members of the project team should end in some deliverable for the project documentation. The first step in conducting a quality review is to assemble the documentation produced during the subphase for distribution to the Quality Review Board. The Quality Review Board consists of between two and eight people who are appointed by the project manager with the approval of the project sponsor and the general manager of systems and programming. The minutes of the quality review meeting are written either to express concurrence with the subsystem quality or to recommend changes to the system that must be completed before the next subphase can be started. By this process the system is fine-tuned to the requirements of the members of the review group at the end of each subphase in the system. The members of the Quality Review Board charge their time to the project budget. Quality review points and review board makeup are as follows: Review Review Board User requirements User oriented System definition User oriented Advisability User oriented Preliminary systems design User oriented Subsystems design User and DP Program design DP Programming and testing DP System implementation User oriented System test User oriented Production control turnover DP To summarize, the quality evaluates the quality of project subphase results, including design adequacy and proof of accomplishment in meeting project objectives. The review board 2017 _ MBLEPMY 10 authorizes work to progress based on their detailed knowledge that all required tasks and subtasks of each sub-phase have been successfully completed and documented. PROJECT TEAM STAFFFING Once a project has risen to the top of the priority list, the appropriate manager of systems development appoints a project manager from his or her staff of analysts. The project manager has a short time to review the project proposal created by systems research before developing a project pan. The project plan must be approved by the general manager of systems and programming and the user sponsor before the project can be funded and work started on the user requirements subphase. The project manager is free to spend as much time as required in reviewing the proposal and creating the project plan; however, this time is charged to the project at a rate of $26 per hour. The project manager must negotiate with a supervisor, the manager of systems development, to obtain the required systems analysts for the project, starting with the user requirements subphase. The project manager must obtain programming resources from the manger of systems support. Schedule delays caused by a lack of systems or programming resources are to be communicated to the general manager by the project manager. All ISD personnel working on a project charge their time at a rate of $26 per hour. All computer time is billed at a rate of $64 per hour. There are no user personnel on the project team; all team members are from ISD. CORPORATE DATABASE John Hart had for several years seen the need to use the computer to support the corporate marketing effort of the bank. Despite the fact that the majority of the banks profits were from corporate customers, most information systems effort was directed at speeding up transactions handling for small unprofitable accounts. Mr. Hart had extensive experience in the Corporate Banking Division of the bank. He realized the need to consolidate information about corporate customers from many areas of the bank into one corporate database. From this information corporate banking services could be developed not only to better serve the corporate customers, but also to contribute heavily to the profit structure of the bank through repricing of services. The absence of a corporate database meant that no one individual knew what total banking services a corporate service a corporate customer was using, because corporate services were provided by many banking departments. It was also impossible to determine how profitable a corporate customer was to the bank. Contact officers did not have regularly schedules calls. They serviced corporate customers almost on a hit-or-miss basis. Unfortunately, many customers were sold on a service because they walked in the door and requested it. Mr. Hart felt that there was a vast market of untapped corporate customers in Ohio who would purchase services from the bank if they were contacted and sold in professional manner. A corporate database could be used to develop corporate profiles to help contact officers sell likely services to corporations. 2017 _ MBLEPMY 11 Mr. Hart knew that data about corporate customers was being processed in many departments of the bank, but mainly in the following divisions: Corporate Banking Corporate Trust Customer banking He also realized that much of the information was processed in manual systems, some was processed by time-sharing at various vendors, and other information was computerized in many internal information systems. The upper management of FNB must have agreed with Mr. Hart because in December of 1986 the Corporate Marketing Division was formed with John Hart as its executive vice president. Mr. Hart was due to retire within a year but was honoured to be selected for the new position. He agreed to stay with the bank until his new system was off the ground. He immediately composed a problem statement and set it to the ISD. Systems Research compiled a preliminary impact statement. At the next priorities Committee meeting, a project proposal was authorized to be done by Systems Research. The project proposal was completed by Systems Research in record time. Most information was obtained from Mr. Hart. He had been thinking about the systems requirements for years and possessed vast experience in almost all areas of the bank. Other user divisions and departments were often too busy: when approached for information. A common reply to a request for information was, That project is Johns baby; he knows what we need. The project proposal as prepared by Systems Research recommended the following: Interfaces should be designed to extract information from existing computerized systems for the corporate database (CDB) Time-sharing systems should be brought in-house to be interfaced with the CDB. Information should be collected from manual systems to be integrated into the CDB on a temporary basis. Manual systems should be consolidated and computerized, potentially causing a reorganization of some departments. Information analysis and flow for departments and divisions having contact with corporate customers should be coordinated by the Corporate Marketing Division. All corporate database analysis should be done by the Corporate Marketing Division staff, using either a user-controlled report writer or interactive inquiry. The project proposal as presented at the next Priorities Committee meeting where it was approved and rated as the highest priority MIS development project in the bank. Mr. Hart became the user sponsor for the CDB project. The project proposal was sent to the manager of corporate development, who appointed Jim Gunn as project manager from the staff of analysts in corporate development. Jim Gunn was the most experienced project manager available. His prior experience consisted of successful projects in the Financial Division of the bank. Jim reviewed the project proposal and started to work on his project plan. He was aware that the corporate analyst group was presently understaffed but was assured by his manager, the 2017 _ MBLEPMY 12 manager of corporate development, that resources would be available for the user requirement sub-phase. He had many questions concerning the scope of the project and the interrelationship between the Corporate Marketing Division and the other users of corporate marketing data. But each meeting with Mr. Hart ended with the same comment: This is a waste of time. Ive already been over this with System Research. Lets get moving. Jim also was received pressure from the general manager to hurry up with the project plan. Jim therefore quickly prepared his project plan, which included a general milestone schedule for sub-phase completion, a general cost estimate, and a request for funding. The project plan was received by the general manager and signed by Mr. Hart. Jim Gunn anticipated the need to have four analyst assigned to the project and went to his manager to see who was available. He was told that two junior analysts were available now and another analyst should be free next week. No senior analysts were available. Jim notified the general manager that the CDB schedule would probably be delayed because of a lack of resources, but received no response. Jim assigned tasks to members of the team and explained the assignments and the schedule. Since the project was understaffed, Jim assigned a heavy load of tasks to himself. During the next two weeks the majority of the meeting set up to document user requirements was cancelled by the user department. Jim notified Mr. Hart of the problem and was assured that steps would be taken to correct the problem. Future meetings with the users in the Consumer Banking and Corporate Banking Divisions became very hostile. Jim soon discovered that many individuals in these divisions did not see the need for the corporate database. They resented spending their time in meetings documenting the CDB requirements. They were afraid that the CDB project would lead to a shift of many responsibilities and functions to the Corporate Marketing Division. Mr. Hart was also unhappy. The CDB team was spending more time than was budgeted in documenting user requirements. If this trend continued, a revised budget should have to be submitted to the Priorities Committee for approval. He was also growing tired of ordering individuals in the user department to keep appointments with the CDB team. Mr. Hart could not understand the resistance to his project. Jim Gunn kept trying to obtain analyst for his project but was told by his manager that none were available. Jim explained that the quality of work done by the junior analysts was not up to par because of lack of experience. Jim complained that he could not adequately supervise the work quality because he was forced to complete many of the analysts tasks himself. He also noted that the quality review of the user requirements sub-phase was scheduled for next month, marking it extremely critical that experienced analysts be assigned to the project. No new personnel were assigned to the project. Jim thought about contacting the general manger again to explain his need for more experienced analysts, but did not. He was due for a semi-yearly evaluation from his manager in two weeks. 2017 _ MBLEPMY 13 Even though he knew the quality of the work was below standards, Jim was determined to get the project on schedule with the resources available to him. He drove both himself and the team very hard during the next few weeks. The quality review of the user requirement subphase was held on schedule. Over 90 percent of the assigned tasks had to be redone before the Quality Review Board would sign-off the review. Jim Gunn was removed as project manager. Three senior analysts and a new project manger were assigned to the CDB project. The project received additional funding from the Priorities Committee. The user requirements subphase was completely redone despite vigorous protests from the Consumer Banking and Corporate Banking divisions. Within the next three months the following events happed: The new project manager resigned to accept a position with another firm. John Hart took earlier retirement. The CDB project was tabled. SYNOPSIS All projects at First National Bank (FNB) have project managers assigned and are handled through the Information Services Division (ISD). The organizational structure is not a matrix. The case describes one particular project, the development of a corporate database, and the resulting failure. The problem at hand is to investigate why the project failed.