Q&A: Accenture's Dave Nuernberg on Why Insurers' Projects Succeed or Fail

During the last decade, insurers have made significant progress in their ability to manage projects effectively. David J. Nuernberg, a senior executive in Accenture's insurance practice, discusses reasons for failure, best practices and lessons learned that insurers can adopt to maximize the effectiveness of their project management and governance and protect their technology investments.

I&T: How is the insurance industry doing with respect to project management? Haven't we seen considerable improvement since the early 2000s?

DN: The success rate of really large projects has improved in the industry over the last decade, but a sizeable number of larger projects continue to fail. We see more clients interested in talking about agile or iterative project delivery as a way for them to demonstrate progress and to gauge project success earlier, prior to having made a sizeable investment and determining a project is not going to deliver the desired business outcome for the estimated expenditure. However in some cases those clients are finding it challenging to adopt and apply agile and iterative approaches to deliver large projects for their core insurance systems.

I&T: What have you seen in the way of notable recent project failures, and why did they fail? What are recurring reasons for project IT failures at insurance carriers?

DN: Reasons for project failures include: lack of an enduring business case; lack of business sponsor commitment and engagement; lack of sufficient dedicated business involvement in the project; setting delivery schedule expectations too prematurely; lack of adequate project management and governance; and lack of clearly documented signed-off requirements.

Other reasons include: inability to control scope in alignment with the budget; insufficient execution of issues, risks, change control and/or dependency management processes; insufficient change management for end user adoption; and technology product selections that didn't have the required ability to scale adequately or that didn't provide the flexibility to accommodate the business requirements.

I&T: What are some best practices of project management that you would list?

DN: Best practice recommendations include: Have an agreed methodology and understanding of the deliverables to be produced; have a sound estimating model and approach; have contingency in budget and schedule and understand the process for approving the use of contingency; and have work plans that are base lined and that are used and maintained throughout the project.

Other best practices include: having a defined and documented issues, risks, change control and dependency management process and then rigorously execute the processes. It is important to capture the actual time worked on tasks and regularly update the estimate to complete. Use industry accepted project management metrics and use interim milestones on deliverable completion to monitor and gauge progress. Provide appropriate transparency in status reporting.

Clearly define peoples' role and responsibilities and communicate and reinforce to project team members why the project is important because the project will not always be easy and will be demanding of people at times. Have defined deliverable review and sign off processes and manage the dependency on vendor sourced deliverables. Establish a stakeholder management plan and a communication plan. Assign people to be responsible for the management and communication with stakeholders. Finally, recognize the individual and team successes.

I&T: What kinds of governance are essential for project success?

DN: I would say a strong business and IT partnership and commitment to work together on the project to make it successful. You should seek to establish a culture for the project within business and IT participants of managing the scope to the budget.

There should be a dedicated steering committee that is engaged and supportive but also challenges project leadership as well as a defined role or mechanism for key vendors to participate in the governance process. Finally, you need rigorous financial and business case management that is regularly reported.

I&T: What are some lessons that insurers should learn from their peers who have succeeded in improving their project management acumen?

DN: First, business and IT need to work together to select the best approach to meet the business objectives. They should establish a cohesive Business and IT partnership and have a committed and engaged business sponsor that demonstrates accountability for the success of the project. They should also insist on sufficient dedicated business involvement in the project. If the business is not willing to incur the pain of dedicating some of their best, knowledgeable people or not enough qualified people, than the project is possibly not as great a priority at this time as it has been depicted to be.

Second, we have seen the importance of a business case that has support from senior leadership and within the enterprise -- preferably a business case that is durable enough to sustain change in leadership or market conditions.

Third, have a clear set of business value enablers that are of importance to achieving the business case that the project team understands and uses to assess and prioritize whether a requirement or feature is important or nice to have. Establish a culture within the project for Business and IT participants of managing the scope to the budget, and establish disciplined and structured governance and project management processes.

We have learned the importance of obtaining input and achieving buy in from the user community, and of managing user expectations and providing change management and communications

Fourth, manage vendor risk. Many vendors are small with limited resources. In selecting vendor products assess whether they have a demonstrated track record to scale to meet the needs of your business volumes.

Fifth, manage stakeholder expectations. Build momentum for the project by delivering on the initial release delivery dates in multi-release projects and then build upon that initial success while reconfirming the commitment of the top levels of the organization. It is harder to shutdown a project that has delivered something of value if the project has also demonstrated the ability to deliver on schedule and within budget.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio