Friday, August 22, 2014

Why should we care about basic operations?

Operations is often viewed, even by its participants, as low-level drudgery, unappreciated (at least until the lights go out), and generally hardly worthy of a manager's valuable time. Project managers, portfolio managers and governance boards are near-unanimous in wanting to analyze, rack-and-stack and execute the exciting work of projects.

PMI is not the only source of PM wisdom but you can't deny that it is influential. One of the long-running battles in the PMI community was the role of operational activities. In retrospect, this was very unfortunate as it set a generation of project managers off on the wrong foot on the road to understanding how projects really work in the larger organization.

As long as PMI was only interested in how PMs could manage the one project they were assigned to, one could close one's eyes to operational matters. Eventually the community recognized that projects seemed to be connected to other efforts that kept moving around, and PMI adopted the concept of a "program". Well, really they only adopted the word. In their language, "program" meant a collection of related projects, and -- here's the unfortunate part -- the definition specified that the program could not contain any non-project work. Yet most project managers will testify that one of the greatest challenges on their projects is that their critical technical experts keep disappearing to deal with emergencies in the operations world.

Meanwhile, in the DoD, which had been running programs for a long time before PMI came along, programs most emphatically do include operations and maintenance activities. The program must account for the cost of keeping the lights on once the hams on the project teams have left the stage, and a great deal of the early analysis goes towards validating the vendors' and project manager's claims that their solution is "maintenance-free". Every dollar or hour that goes into maintenance after a project is over is a resource that cannot be applied to some other project or activity. And, despite the importance of the innovations that projects are to bring, most organizations have been extremely unsuccessful in building a culture where "important" outweighs "urgent". I've seen several CIOs who wanted to see themselves as value multipliers if not actual profit centers for their organizations -- but as long as the e-mail system was acting up, the other executives had no intention of investing in innovation as long as the company was having a problem handling as-is technology.

In my own experience, we found that the annual infrastructure support costs were growing at a rate far exceeding inflation -- and this in an industry that prides itself of Moore's Law, which should suggest constant and dramatic declines in costs of service. One of the stark realities of operational costs is that you can leave them out of the budget sheets if you want, but they'll still show up. Then there is no option to just let things go until the next fiscal year. Our program management team applied the DoD's default support costs (100% of the acquisition costs spread over the net 5 years) and concluded that the operational activities would consume the entire budget, leaving no funding for any significant project investments, within the next 3 years. This assessment was pooh-poohed in the first year, and the executives added on another few million dollars worth of projects (which would also have to be supported eventually). But by the end of the second year it became clear that the inflection point had already been reached. And the money that was spent on those projects was gone -- you can;'t just turn your unused code in for a refund. Key organizational priorities had to be shelved for a year or more, and the organization had to fund a short-term increase in the budget to fund an investigation into how to reduce operational costs.

Do your programs and governance processes exclude operational costs?
Are you finding that the project work always seems to be delayed, mostly because of resource availability?
How can you change this?

You cannot make significant structural changes overnight. That makes it all the more important to start campaigning to bring operational costs under management control along with the rest of the budget.