Notes

Outline

Chapter 12: Initiating

Opening Case Chapters 12-15 are all based on a real case study Fay Beauchine, VP of Reservations at Northwest Airlines (NWA), sponsored the ResNet projects Peeter Kivestu, a marketing director, was the project manager for ResNet ResNet was the first information technology project led by non-technical managers at NWA

What Is Involved in Project Initiation? Initiating is the process of recognizing and starting a new project or project phase It is critical to ensure that the right kinds of projects are being initiated for the right reasons It is better to have moderate or even a small amount of success on an important project than huge success on an unimportant one

Supporting Explicit Business Objectives The most important reason for initiating IT projects is to support explicit business objectives NWA was having financial difficulties in the early 1990s, so reducing costs was a key business objective ResNet would help stop the financial drain caused by the reservation call centers

Table 12-1. Initiating Processes and Outputs

Background on Northwest Airlines (NWA) Northwest Airlines is the world’s fourth largest airline and America’s oldest carrier In 2001, NWA had over 53,000 employees worldwide The reservation system used 3,000 dumb terminals in the early 1990s The reservation process was becoming more complex, and the call centers were losing money

Background on ResNet The reservation system before ResNet was PARS Reservation agents had to use cryptic commands to use the old system All information was on one character-based screen Deregulation and new marketing initiatives complicated the reservation process Call times were increasing

Figure 12-1.  Sample Reservation Screen Before ResNet

Focus on Making Direct Sales Fay Beauchines’ vision was to change the focus of the call centers from just information and service to sales Making a direct sale saved NWA commission fees of 13% plus 18% in overhead cost savings A new reservation system was needed to help agents make direct sales

Staffing a New Project Fay selected Peeter Kivestu, a marketing director at NWA, as the ResNet project manager Peeter’s strategy was to prove the concept of ResNet first with a prototype Peeter asked Arvid Lee, a senior member of the IS department, to lead the IS team on the ResNet projects Kathy (Krammer) Christenson, a marketing analyst, become the ResNet application development manager

Table 12-2. Three Main ResNet Projects

What Went Wrong?

Selecting the Project Manager An important part of project initiation is selecting a project manager.  Fay selected Peeter because he knew the airline business he understood the technology he knew that technologies could improve business productivity Peeter used his passion for the project to convince Fay and others that he should be the project manager

Preparing Business Justification for the Projects For the Beta project Fay convinced senior managers to invest $500,000 into developing a prototype system Peeter emphasized his track record as a leader and what the competition was doing Arvid was well-known and respected for his IS expertise

Preparing Business Justification for the Projects For the ResNet 1995 and 1996 projects Very strong justification was needed to make major investments Peeter prepared detailed plans and focused on key business objectives of the project impressive results from the beta project the opportunity to make money with the new system (NPV estimate of $37.7M)

What Went Right?

Table 12-3. ResNet 1995-96 Financial Summary

Figure 12-2.  Sample ResNet Screen

“What ResNet is to PARS Is Like What AT&T Is to Two Sticks and a Hollow Log” ResNet integrated information from different areas and put it all on one screen Context-appropriate sales messages helped agents provide customers with information that would help close a sale ResNet ensured accuracy and consistency in call handling

Figure 12-3.  Executive Summary for Justifying ResNet Project

Developing the Project Charter NWA did not use official project charters in the early 1990s Receiving formal budget approval was the main means for chartering projects The project plan for ResNet was called a Purchase Request 2 (PR2), which included information on the project, technical, development, applications, operations, and change management approaches

Table 12-4. Next Steps After Beta ResNet Project

Actions of the Project Manager and Senior Management in Project Initiation Quickly assembling a strong project team Getting key stakeholders involved in the project early Preparing detailed analysis of the business problem and developing project measurement techniques Using a phased approach Preparing useful, realistic plans for the project