Innovative Healthcare Solutions. Getting Governance Right: Creating IT Project Success through Effective Sponsorship

Transcription

1 Innovative Healthcare Solutions Getting Governance Right: Creating IT Project Success through Effective Sponsorship By Pat Stewart, Principal Innovative Healthcare Solutions, Inc

2 Contents Abstract... 3 Executive Summary... 3 Introduction... 3 A New Definition of Project Sponsorship... 4 Project Governance: A Consultative Approach... 5 The Future of Project Governance... 6 P a g e 2

3 ABSTRACT This paper examines project governance, a key success factor in healthcare information technology (HIT) implementations. It provides an insightful definition of sponsorship that highlights the shortcomings of traditional role assumptions and the hallmarks of an effectual alternative. Finally, the paper discusses the value of a consultative approach to project governance. EXECUTIVE SUMMARY Undoubtedly, President Obama s signing of the American Recovery and Reinvestment Act of 2009 (ARRA) will set off a flurry of HIT implementation activity. Projects new and stalled will be underway as healthcare organizations rush to achieve meaningful use of electronic health record (EHR) systems and garner their share of the $19 billion in Medicare and Medicaid HIT incentives over five years. Between 2011, when early adopters receive the highest payouts and 2015, when late adopters start paying penalties, ARRA can mean incentives totaling as much as $48,400 for eligible professionals and up to $11 million for hospitals assuming they can implement the systems. While healthcare organizations eventually complete most HIT projects, at best, only about five percent of these implementations deliver the expected outcomes and benefits on time and within budget. At worst, implementations end in project abandonment. The primary reason: Poor project governance in the form of ineffective executive sponsorship. Lacking both a realistic understanding of their roles and an adequate level of training, executive sponsors often find it difficult to drive projects to successful completion in a time- and resource-effective manner. However, a consultative approach to project governance can enhance an organization s governance efforts and help ensure the effective sponsorship critical to successful implementations. INTRODUCTION Strategy without execution is no more than intent. Success requires both. For most organizations, success means a project has the anticipated business outcomes and benefits, on time and within budget. Unfortunately, when it comes to HIT implementation projects, more often than not, success is the exception rather than the rule. Consider the following: 42 percent of IT projects are abandoned before completion i 50 percent of all technology projects failed to meet chief executives expectations ii 75 percent of projects fail because of disappointing results or abandonment iii 51 percent of application projects are challenged -- over time, over budget and/or lacking critical features; only 34 percent of projects come in on time and on budget iv 90 percent of project managers underestimate project size and complexity. Nearly half have cost overruns of 10 percent to 40 percent and only 16 percent meet scheduled due dates consistently v P a g e 3

4 Why? Poor execution--not bad strategy is the cause of most project failures. In a recent survey, one group identified the following top reasons for IT implementation failures: 40 percent attribute failure to poor planning and communication; 20 percent cite mismanagement and rejection by end users; and 15 percent blame overspending. Executing the strategy is pivotal to success. And effective project governance and sponsorship are pivotal to executing the strategy. A NEW DEFINITION OF PROJECT SPONSORSHIP For a project to succeed, it must have support from top leadership, a sponsor. While most agree on the importance of sponsors, many struggle with defining their true roles. The skills and knowledge sponsors need for effective project governance differ greatly from those they use as operational managers (see Table 1). For example: Sponsors don t manage projects; they direct the project team to achieve specific deliverables while uncovering and removing obstacles to the project s successful completion. Sponsors must resist the temptation to step into traditional roles, clearly delineating between solutions that work in the operational management environment and those that will be effective in the world of project governance. Sponsors aren t doers; they are enablers and facilitators. Using a hands-off management approach to guide the project manager and project team, sponsors keep an eye on the big picture what the HIT project implementation will bring to people inside the organization and those outside that it serves Sponsors shouldn t be involved in day-to-day project activities directly; but they must own the project and commit fully to it. Much more than expressing support and assigning responsibility, effective project sponsorship assumes accountability for the project s success. SPONSORS Responsible for governance Directs the project team Enables and facilitates Strategic Hands off Owns the project; accountability PROJECT MANAGERS Responsible for execution Manages the project Does Tactical Hands on Involved in day-to-day project activities Table 1: Differing roles in project implementation P a g e 4

5 While there are many considerations, executive project sponsors, at a minimum, must ask and answer the following important questions: 1. What are the measures for project success? The governance and project teams must understand and agree on the business outcomes, benefits and value expected from the HIT project, as well as the timeline and budget. Sponsors should consider and challenge every aspect of the project against these measures and every team member should be able to articulate why the organization is implementing the strategy. 2. What are the roles of the governance team? While the roles can vary for those approving the investment, governance executives should have clear and recognized accountabilities. 3. What are the measures of the governance team s success? Although positive business outcomes are the ultimate measure of governance success, sponsors cannot wait until the project ends to evaluate whether the strategy was implemented correctly. Over the life of the project, executive sponsors must monitor critical success factors, potential obstacles and the budget, measuring these factors against the strategy and its timeline to determine if the project is on track. They must be willing to take appropriate action to ensure the project s success, establish priorities and resolve issues. 4. What are actions--and inactions--can cause the project to succeed or fail? Sponsors must help the project team focus on the right issues, in the right way, at the right time. The governance team should understand the dynamics of projects--how problems arise, how external events affect the plan and how to maintain focus on the big issues throughout the project. They also should garner support for the project throughout the organization and take immediate action should that support falter. Executive sponsors must assess, manage and protect the business value of the project to deliver results that meet or exceed organizational expectations. 5. What should my interactions and relationships with the project manger and the project look like? The project manager is the governance team s representative. Without trust and a close working relationship between the project manager and the governance team, the project is doomed to fail. While the project manager should present an accurate status of the project, the governance team should alert the project manager to organizational initiatives that could have an impact on the project or its successful implementation. Often, executives think in silos and forget to pass valuable operational information to the project manager. PROJECT GOVERNANCE: A CONSULTATIVE APPROACH Although the concept of project governance has been around for nearly three decades, research suggests few executives can execute project sponsorship effectively. Despite the common assumption that governance involves too much accountability with too little control, executive sponsors must understand that project governance is an active role. At the same time, project managers must understand that their success requires effective governance structures that steer their projects along the correct path. Collaboration between the project team and the governance team makes or breaks the process. A consultative approach is one way to encourage and further this collaboration. P a g e 5

6 Experience is the most important advantage a consultant brings, and therefore a key criterion for selection. Look for three-tier experience: 1. Organization-level: Facilitation skills that can guide your organization through critical planning processes to develop: Realistic project scope with clear, achievable objectives that mitigate risks Resource requirements that balance quality, scope, time and cost constraints Realistic project plans that can be managed, monitored and controlled Proven tools and methodologies to guide your organization through the project 2. Executive-level: Look for familiarity derived from successful, varied projects across many types of organizations. Specifically, look for experience in: Developing governance structures Making committee and structure recommendations Understanding decision-making processes Enacting change management controls Planning communications Guiding executives through defining the sponsorship role, making decisions and taking action to keep the project on track 3. Project-level: Seek out project drivers that can monitor processes, proactively identify issues and mitigate corrective action to get decisions made. Look for team-builders with proven ability to create teams that can: Establish trust, Sustain high morale, Create a productive work environment, Develop staff and Remove obstacles to success Innovative Healthcare Solutions (IHS) is one of the industry s most experienced HIT project consultants. IHS project managers understand how project governance should work. They work with executives to establish methodologies and processes that promote effective sponsorship focused on sorting out problems, removing obstacles, taking pre-emptive action to prevent risks, managing critical success factors and championing the project through to successful adoption. IHS belief in the importance of effective project governance extends to its operations. Each week, principals Robin Bayne and Patricia Stewart conduct a status call with every consultant on their projects. Their extensive industry experience creates an internal steering committee that mirrors effective project governance for the healthcare organization. THE FUTURE OF PROJECT GOVERNANCE In the next two years, meaningful use will become one of the most important terms and operational goals in healthcare. To secure the highest incentives, organizations that have systems will need to ensure meaningful use of them. To avoid significant penalties, those that do not have systems will need P a g e 6

7 to get them. No matter where an organization is, there will be consequences effective project governance will determine whether those consequences are good ones or bad. For more information regarding IHS services, visit or call Laura Hudman (east coast) at (850) or Dan Hereid (west coast) at i Wall Street Journal ii Wall Street Journal iii Financial Executive Magazine iv META Group v Robbins-Gioia Inc P a g e 7