Business Purpose of a Project

This is one of the most important factors influencing the success or failure of a project. How can you a plan and run a project successfully if you do not know what you are setting out to achieve? Business and finance managers must be actively involved in defining the business purpose of a new project or systems implementation. Before any new project is undertaken there must be a clear idea of the benefits of the intended outcome such as:

Improved customer service

Streamlined business operations

Improved competitiveness

New product or service offerings

Improved productivity

Reduced unit costs

Improved profitability.

In the private sector the profitability factor is almost paramount as no project should be initiated if it is going to lose money. There must be a tangible return on investment and all parties involved in the project must bear this in mind.

In the public sector or non-profit making organisations there is obviously less emphasis on making making money. However, is there not a moral imperative to either save money or to get the best value out of an investment?

I suspect that in both the public and private sector too many people do not focus keenly on value for money and eliminating waste; this is not an area which should just be left to the domain of financial and management accountants.

The business purpose of the project is translated into the objectives of the plan and the project budget. Before a project is initiated it should be the subject of a feasibility study. The practicality of implementing the business objectives is critically examined from an operational and cost versus benefit point of view. I have been involved in a number of feasibility studies during my career. During one feasibility study we quickly decided not to proceed with project because the technology could not meet the business purpose. But this decision was reversed several years later when improved computing power became available. In another feasibility study we decided to drop a banking service because the cost versus benefit of computerising it was not worthwhile. In those feasibility studies both the business and IT management were heavily involved in the decision making.

Once it has been decided that a project is feasible from a technical and money point of view the decision must be made whether to proceed or not and when. Once again business and IT management must play a key role to show how the project fits in with the other activities of the organisation. Possible business disruption should be taken into account before deciding to go ahead. Once the decision to implement has been made, the business purpose of the project should be clearly published by the senior management together with the tangible benefits of delivering the system. The senior management must also demonstrate their continuous commitment to the implementation of the project.

I learnt a long time ago that it is best to design a system backwards thus if , for example, you are simply designing a report to produce some management information it is best to agree and define what the output must contain and look like first. From this definition the processes to produce that output can be constructed and then the input requirements defined. Of course, a system specification is read from front to back but you will fail if you do not concentrate on the output or outcome required.

The same applies to the business purpose, it is the starting point of the project and all project activities must be planned and executed to achieve the business purpose. If the business purpose is irrational or ill-defined no project can correct the situation no matter how well it is run so there will be failure.

Budding project managers will do well to ensure themselves that the project they are being asked to run has a rational and well defined purpose and that all parties to the project are committed to its success otherwise ultimate failure looms. And before you think that I might be talking rubbish: what did the the application of "Gaussian Copula" risk calculations, using highly sophisticated automated programs, do to the finance industry and our western economy? Well, it nearly led to global financial meltdown. The business managers in the finance industries affected did not truly understand the business purpose of their programs and the likely effect on the financial viability of their businesses. Try this book "Fool's Gold" by Gillian Tett.

There are hundreds of examples of lesser failure. If you can foresee a failure it might be best to avoid it despite the monetary attractions. Look for projects which have a tangible business purpose which is clearly defined and communicated and establish the feasibility of the project before making a commitment. This will get you up and running on the difficult path to success.