Modes of control in IT Project Portfolio Management

v/Lars K Hansen

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Introduction

Thanks for this opportunity to percent control theory and how this can be used to understand IT PPM

• I have not yet done the empirical investigation yet • I hope you will contribute with real life examples in the last

part of the presentation

Schedule for the presentation • 11.30-12.15 Control in IT PPM

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The content of this presentation

1. Control in IT PPM – why is this important?

2. A brief view of the history and most basis definitions in control theory

3. The four modes of control How can control be understood on a more abstract level?Real life examples of used modes of control in IT PPM

4. The dynamic on control IT PPM. Do control change during different phases in IT PPM?Real life examples of the dynamic of control in IT PPM

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Control in IT PPM – why is this important?

• Contemporary organizations rely increasingly on IT to stay competitive and adapt to fast changing environments

• Project management has for sometime been the most used principle for managing the development of IT in organizations (Kirsch, 1997; De Reyck, 2005)

• But organizations increasingly become a multi-project environment, because more work is organized by projects (Nieminen & Lehtonen 2008).

• Organizations experience that effective management of single projects do not fulfill organizational objectives sufficiently.

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Control in IT PPM – why is this important?

• Research reveals that a large number of organizations are gaining below their potential in terms of creating value from their IT project portfolio(Weill & Vitale, 1999; Jeffery & Leviveld 2004; Kaplan, 2005; Weill & Aral, 2006)

• Insufficient management of the IT portfolio is a significant reason (Jeffery & Leviveld, 2004).

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Control in IT PPM – why is this important?

• IT project portfolio (IT PPM) can be compared with the management conducted by the control tower in an airport. Some form of management must control the departure and arrivals of the airplanes otherwise the airport activities will be ineffective, even though the individual employee is highly skilled.

• Likewise, IT PPM is about securing that organizational IT projects, in a controlled way, take off and land the right places. Without this “control tower” organizational IT projects will be less beneficial and less effective. Even though the local IT projects are well conducted (Kendall and Rollings 2005)

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A brief view of the history and most basis definitions in control theory

• Control in management of IT is more that formal and technical mechanisms, but is also about social mechanisms involving different levels in the organization (Ouchi 1979).

• Control theory can be used to describe all attempts to ensure that individuals in organizations act in a way that is consistent with organizational goals and objectives (Kirsch, 1997).

• The problem of organizing is the problem of obtaining cooperation among a collection of individuals or units who only partially share congruent objectives (Ouchi 1979)

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A brief view of the history and most basis definitions in control theory

• Owns its legacy to (Ouchi 1979)• Is big in Management science • Is use to explain management of IS• Have not been used to explain portfolio management: but

control of IS projects (Kirsch, 1997); control of outsourced IS projects (Choudhury & Sabherwal, 2003); control of virtual IS development teams (Piccoli & Ives, 2003); control of IS development projects in a global contexts (Kirsch, 2004); control of IS off-shoring (Dibbern et. at 2008; Rai, 2009); control of geographically distributed IS projects performing risk management (Persson, et al, 2009); control of client management regarding the IS vendors (Rustagi et. al, 2008).

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The four modes of control

Principal

Agent

Formal :Behavior controlOutput control

Informal ClanSelf

Four modes of control (Kirsch 1996; 1997):

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The four modes of control; Behavior control

Key characteristic: • Rules and procedures articulated • Rewards based on following rules and procedures • Precise steps can be described and specified • The principal can observe the agentAntecedent conditions• Knowledge of appropriate behavior • Behavior obsevability Examples of mechanisms • Project methodology • Supervisor-subordinate hierarchy/bureaucracy

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The four modes of control; Output control

Key characteristic: • Outcome and goals articulated • Rewards based on producing output and goal • Less effort is needed to control (Ouchi 1979). • Preferred as number one

Antecedent conditions• Output measurability (often quantified)

Examples of mechanisms • Defined target implementation dates and/or budget (Kirsch

1996)• Expected level of performance (Henderson and Lee 1992) • Defined project milestones (Henderson and Lee 1992)

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The four modes of control; Clan control

Key characteristic: • Common values, beliefs & and problem solving philosophy • Identification and reinforcement of acceptable behavior • Specific task goals evolve over time

Antecedent conditions• Appropriate behavior unknown• Outcome not measurable • Social capital (Structural, relational, cognitive) (Kirsch 2010)

Examples of mechanisms • Collations of individuals shared ideologies (Kirsch 1996)• Socialization (Ouchi 1980)• Hiring and training practices (Ouchi 1980)

Implemented rituals and ceremonies

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The four modes of control; Self control

Key characteristic: • Individual defines task goals or procedures • Individual monitors, rewards sanction self• Rewards based in part on individual’s self control skills• Often used to “control “ people with seniorityAntecedent conditions• Complex and non routine task • Performance evaluation ambiguity • Lack of required rules or procedures • Desire to exercise self control • Individual ability (Can and will) Examples of mechanisms • Individual empowerment (Klein and Kraft 1994)• Self management (Klein and Kraft 1994)

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The four modes of control; Interplay

Reinforcing: • Output + clan

Counteracting: • Output – clan - (Hawthorne experiments showed the clan

control mechanism that undermined the organizations output control)

• Implementation of lean as a process to change processes. (Behavior control – but this can come in conflict with controlling the output)

• Use of PRINCE2 (Behavior control) and project goals (Output control)

• Output control: The predefined cut in the budget! – Is this shadowing the gain of other benefits?

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IT PPM can be considered three levels

Adopted from Archer and Ghasemzadeh (1999)

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IT PPM can be considered three levels

Senior managers

(IT) portfolio management

Local IT projects

Modes of control

Modes of control

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The four modes of control in two levels

Senior managers

(IT) portfolio management

Local IT projects

Modes of control

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Control as a dynamic process

• Choudhury & Sabherwal (2003) investigate dynamics in modes of control in (outsourced) projects. They show how the early phases are dominated by outcome control and later phases are dominated by behavior control.

• The literature consider PPM as being conducted in three phases (Archer and Ghasemzadeh, 1999):• Strategic considerations phase, • Portfolio selection phase, • Post selection phase

 

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Control as a dynamic process

Senior managers

(IT) portfolio management

Local IT projects

Strategic considerations

Portfolio Selection

Post selection

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IT PPM can be considered three levels

Adopted from Archer and Ghasemzadeh (1999)

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Control as a dynamic process; how do your organization perform control?

Mode of control

Strategic Selection Post selection

Behavior ? ?Output ? ?Clan ? ? Self ? ?

Senior managers

(IT) portfolio management

Local IT projects

Mode of control

Strategic Selection Post selection

Behavior ?Output ?Clan ?Self ?

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The four modes of control; critic raised against control theory

The four modes of control: • Is self control a control mechanism – and what does it mean

to be self rewarding?• Is behavior control and clan control the same?• Is the relation always working from the strategic objectives

and down towards the local projects?• Is it (political) correct to talk about control in a Danish

municipality (flat power-structure and great emphasis on employee empowerment)

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Finally

• Thank you for you attention