The Client's Challenge
The client’s department stores had been under-performing for years due, in part, to a lack of an adequate retail merchandising information. A new merchandising system was selected and a major ($72 million) program was initiated to ‘fix the problem’.
Meanwhile the client decided to sell off the department stores and therefore needed an assessment of the program to inform potential buyers of its status and likelihood of success.
The project was three months into ‘Phase 2’ of a three-stage program.
The complete Merchandising System development and implementation program.
We started by reconstructing the business case and its value equation to clearly and specifically establish what the program was to deliver and the nature and scale of the benefits available.
We then assessed the program documentation for alignment with the business case and its value equation — was the project set up to deliver the business outcomes, benefit and value available?
We analyzed the actual workload vis-à-vis the planned and reported workload.
Program staff, the sponsor, steering committee members and end users were all interviewed as to their understanding of the program, its measures of success and its status.
When reconstructing the value equation we found the benefits had been massively under-stated (@ $35 million) – being just enough to get the project approved. We therefore revised the value equation and stopped counting when the benefits exceeded $100 million.
As no clear, measurable criteria had been established for the end of Phase 1, we found that 25% of the work being done three months into Phase 2 was closing off Phase 1. This was obviously going to have downstream delay ramifications. (The program was later delayed 6 months.)
The systems implementer (IBM) had totally replaced their program management team thereby losing all of the accumulated knowledge from Phase 1 — leading to a reduction in productivity and progress.
The Program Sponsor (the Department Stores CEO) did not want to hear of problems and therefore encouraged the program team to ‘hide’ bad news. As a result, our findings were alarming ‘news’.
The change approach was designed to deliver the system, but not to deliver the business outcomes and benefits. However, this finding was mitigated by substantial end user commitment and involvement in the program to “ensure it is a success” (their words).
The additional value identified was realized by the Departmental Store’s purchaser who took our report and the revised value equation’s benefits and realized immediately over $60 million of the additional benefits as they did not require the implementation of the system.