Managing Megaprojects

It's all about the business, communication and the 'big sell' to executives, employees and partners.

CIO Andres Carvallo presented a grim prognosis for Austin Energy's IT systems to company executives during a meeting in January 2003. The 10th-largest public power utility in the nation had spent several years building IT silos without a CIO at the helm. The company was rife with inefficiencies. There were too many manual processes, the utility was paying twice with redundant systems, companywide IT standards were nonexistent, and executives didn't have real-time data for making decisions.

Yet Carvallo says he emerged from the three-hour meeting with full buy-in for a $50 million transformation of the $1 billion company's IT resources, systems, processes and standards, and a four-year plan to do "whatever I want" to tackle widespread inefficiencies. Now three years into the project, Carvallo's team is meeting its goals.

How'd he do that? It was no magic trick. Many of this year's Premier 100 honorees know the secrets to tackling megaprojects -- those multiphase IT transformations that affect an entire company, encompassing multiple systems over several years.

Most agree that success starts with understanding the business and making IT the enabler for project success, and then bringing clarity and passion to all stakeholders.

Build to Suit

Carvallo believes that in a megaproject, it's change management that requires the most attention from start to finish. Understand employees' and partners' capabilities and limitations, and build new systems accordingly, he says.

"It's really not about technology. IT can always build the most colossal Ferrari for any solution, but that's not always what's needed. Sometimes what's needed is a Volkswagen or a bicycle," says Carvallo, who spent a month interviewing hundreds of IT employees before coming up with the project plan.

Andres Carvallo

"It's really not about technology," says Austin Energy CIO Andres Carvallo

Photo Credit: Will Van Overbeek

The utility holds ongoing training for all employees, including certification on most enterprise applications, to guarantee that power users truly know how to use the products. "We do focus groups with every customer segment that we interact with on a [business-to-consumer] basis, and we train our external customers on how to use our portals," Carvallo adds.

When Austin Energy moved to a wireless system for repair work orders, Carvallo had to consider that workers were accustomed to paper order forms. The new plan called for laptops in every repair truck that would tell workers where to go and what to do. "Do they have the computer skills for that? Can they get trained on rebooting systems or closing an order so that it can go back into the billing system? All these variables have to be considered as you're bringing in automation," he explains.

When assembling a team to lead multiple projects in an IT transformation, "you have to overwhelm this task with resources and capabilities," says Michael Patterson, a partner at Patterson Pruden LLC, a New York-based consulting firm.

If a project requires five highly skilled team members, at least three of them should have been successful at leading megaprojects in the past, Patterson advises. "If I don't have three, I need to go recruit one" from a business unit, an outside consulting firm or a headhunter, he adds.

Embrace Breakdowns

Megaprojects won't succeed unless the IT staff embraces the breakdowns, says Tom Scott, executive vice president of operations and CIO at Direct Holdings Worldwide LLC in Virginia Beach, Va. "To believe there shouldn't be breakdowns [during a project] is like believing that Donald Trump will change his hairstyle," he says.

Scott just completed an overhaul of all IT applications for Direct Holdings' catalog retailer, Lillian Vernon, including those supporting order entry, customer service, warehouse management, financials, decision support and a new Web site. Each application was replaced with one or more best-of-breed applications.

IT staffs have to adopt a "glass half full" attitude, he says.

"[Breakdowns] will either be your sinkhole or your proverbial thousand points of light. They're like the gold in the project to identify where course corrections should be made, " Scott says. "Once people on project teams get focused on how to avoid looking bad, they begin to self-destruct. They start doing crazy things like 'How do we blame the vendor?' or 'How do we cover up issues to avoid losing our jobs?' "

The best way to avoid the spiral is to invent new ways to declare success, Scott says. "If you missed a big day, you have to reinvent what success now means. If you have a budget overrun, go back and look at ROI," he says. You're still gaining this much and saving this much to get this system in."

Collett is a Computerworld contributing writer. Contact her at

Special Report

2006 Premier 100 IT Leaders

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Copyright © 2005 IDG Communications, Inc.

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