Communications and Integration Management Issues - Essay Example

Communications and integration management 2005 Executive Summary This report addresses the role of a PMIS in defining and communicating the project plan to the major stakeholders, Project Management Information System (PMIS), the importance of integration management in the project, and many others. Stakeholders are people who are affected by or who can influence the project This report also found that the merger of Hewlett-Packard and Compact was considered successful yet controversial. It was considered successful because after the merger was closed in May 7, share price immediately rose following the incredibly improved sales and product line-up. The numbers have evidently supported the positive statement. However, the merger was also considered controversial due to how the merger was carried out, which involved the lost of 15,000 jobs, the release of 17 top executives from both parties, and investigations by United States SEC and European Commission (Shannon, 2001). Concerning the merger between HP and Compaq, there is notion saying that HP is simply making decisive moves that position them to win the market by offering more values to customers. For this reason, there are three suggestions on having successful merger: Management should maintain their current style and preserves employee and shareholder morale by displaying successes and achievements as evidences that their management style really works Keeping each company on segments they are experienced with, analyzing and addressing cultural issues, incorporating cultural cost in financial calculations, maintaining clear framework and transparent management The combined company should split up based on their product lines, which would supposedly produce a much larger profit in total Table of Content Executive Summary i Table of Content ii List of Figures iii List of Tables iv I. Introduction 1 II. Stakeholder Communications Management 2 III. Project Management Information System (PMIS) 5 IV. Project life cycle 7 V. Project Integration Management 11 VI. Project Monitoring and Change Control 13 VII. Project Closure 16 VIII. Conclusion 16 IX. Recommendations 18 List of Figures Figure 3.1 Diagram of PMIS Role 7 Figure 4.1 Typical Figure of a Project Life Cycle 8 Figure 6.1 Typical Change Control Flow 14 List of Tables Table 2.1 Planned Communication Plan (Header) 3 Table 2.2 Communication Plan 4 Table 4.1 Typical Project Life Cycle in IT 9 Table 4.2 Typical Critical Success Factors of a Project 10 Table 5.1 Typical Critical Aspects of Project Integration Management 12 I. Introduction Vision is the matter that companies imagine what they want to be. In achieving his vision, pros and contras will adorn companies as they grow. Sometimes, the principal difference between the owners or shareholders result in prolonged discussion that bring the company to the long-term success but disputes will render the company to break up, business separation or turnaround in the ownership. Meanwhile, there is also a case where shareholders decide to encourage the business growth through several schemes and step on them. In the event of growing business, shareholders should encourage the integration of whole business processes and applications from customer relationship management (CRM), financial applications to Human Resource and Sales Force Automation (SFA) to in order to smooth the development steps. This is imperative since in today's fierce competition, business should ensure that information in the business streams flawlessly, from marketing to selling and signing contract to invoicing and collecting revenues. Concerning the integration management, this paper will discuss the integration issues in a merger and acquisition between HP and Compaq. The reason of choosing this project is due to the interesting case emerged from the merger between two competing corporation in computer industry. Lock (2001) defines that any projects including HP-Compaq merger project fall into three following objectives: 1. Quality This objective tells that the result of a project must be in line with the planned purpose. For example, HP-Compaq merger intends to integrate two competing giants in computer industry while cutting unnecessary costs. 2. Budget The second objective is budget, which tells the completed project must not exceed the authorized expenditure. 3. Time Completion Since a project composes of several stages of completion, therefore, each stage should be completed no longer than specified dates. Moreover, this report also addresses the role of a PMIS in defining and communicating the project plan to the major stakeholders, Project Management Information System (PMIS), the importance of integration management in the project, and many others. In the end, this paper will provide findings that are important and likely to be a threat to the project success and be closed by recommendations in response to the specific conclusions and lessons learned. II. Stakeholder Communications Management The important stage in the merger between HP and Compaq is the warm communications between the two companies' shareholders (managements, employees, customers etc.). This is due to the stakeholders, people who are affected by or who can influence the project, are ones that have great concerns on the impacts created by the merger. Under such circumstances, it is important that the shareholders understand the important, benefits, and value creation of the merger. Increasing shareholder value requires knowledge about the sources of value creation and destruction within the corporate organization as well as the value implication of any new strategy contemplated. A simple value creation model synthesizes the link between synergy and shareholder value. Value creation is expressed in terms of the key determinants of free cash flows and their present value (the expected return on equity (ROE), the cost of equity capital, the expected growth of the company, and the period) during which the company is expected to maintain a positive spread between its ROE and its cost of equity. The source of shareholder value is two: The company creates value by maintaining a positive spread between its ROE and its cost of equity capital (that is, it generates profits that exceed what investors require from companies in the same class of risk). The company also creates value from growth opportunities (investment in new assets) at a positive spread. On the other hand, the company destroys value when the spread is negative. If the ROE is expected to remain below the cost of equity capital, faster growth will simply accelerate destruction of shareholder value. Shareholders' value creation implies that there should be effective communication among shareholders since it is critical steps in maintaining excellent working atmosphere. There are some reasons why setting up excellent communication becomes important in the merger of HP and Compaq: IT companies like HP and Compaq are now in a stage of finding their role in providing value to computer industry. This situation is challenging since the companies' stakeholders have mixed view that is prone to communication failure that further damage the combined company's images HP and Compaq should aware that currently IT-related organizations have moved from process to service-based organizations that in turn influence how the combined company behaves Market is growing within the past three years in which companies rely heavily on IT Current business situation suggests strong communication since business requires compliance, governance and performance management that need communicating throughout the new company (Mingay 2005) Considering the importance of setting up good communications between shareholders, below table shows a planned communication strategy as a part of a well-planned strategy. The table describes guidelines for creating communication plan. Table 2.1. Planned Communication Plan (Header) Project Name: IT system Integration of HP-Compaq Business Unit / Organization: HP-Company (The New Company) Project Manager: Chief Information Officer Planned Project Start Date: 2004 Planned Project End Date: 2005 Project Team: IT Division from HP and Compaq Contact Person, Phone #(s): n/a Last Updated: June 2005 The above table shows the header of a communication plan of a project. The header is important to specify the nature of conduct of a project so that stakeholders can monitor the progress of the project by looking at header information. In addition to header information, a communication plan should provide details items, describing what a project runs. Table 2.2 Communication Plan What Who/Target Purpose When/Frequency Type/Method Initial Meeting Key/limited stakeholders* (HP-Compaq's managements, employees stc) Collect required information for initiating project Prior to the beginning of a project (Start Date) Meeting/Discussion Issue Accepted Project Plan Key/limited stakeholders* (HP-Compaq's managements, employees stc) Issue and distribute the project plan to inform stakeholders about scope of project Prior to Kick Off Meeting (before Project Start Date) Document of project plan (hard copy/soft copy) distributed to stakeholders Project Kick Off All Stakeholders (HP-Compaq's managements, employees stc) Discuss roles and responsibilities of every stakeholder At the starting point of Project Start Date> Meeting and Discussion Progress Reports All Stakeholders (HP-Compaq's managements, employees stc) Inform stakeholders about the progress of the project Schedule basis (weekly and monthly) Distribute Report. The report is distributed electronically Team Meetings All project team member based on sub-teams, technical team etc To assess progress of each team project and decide next steps Schedule basis (weekly and monthly) Meeting and Discussion Post Project Review Project Manager, Key/limited stakeholders (HP-Compaq's managements, employees stc) Asses the project results, identify future improvement plans At the end of the Project Meeting and Report Discussion * Key Stakeholders are parts of HP and Compaq stakeholders that have the greatest influence in the project in which the their absence will cause the failure of the project Source: CPMM Communication Plan', [Online] Available at: http://projectmanagement.cornell.edu/Controlling/CPMMCommunicationPlan.doc III. Project Management Information System (PMIS) Before automation era dominates manufacturing industry, accuracy of products depends on the ability of human to keep his eyes open during the manufacturing process in order to prevent any defects in the products. Similarly, prior to computerization era becomes a mandatory for commerce, employees used to enter and maintain information in books then they had to look up the required information and perform any calculations and designs. Such critical tasks are definitely prone to human errors that any employee could perform any miscalculation. Given the importance of information processing in the commerce, it is not surprising that business of any types was among the earliest adopters of automated information processing technology. Historically, daily operation in commerce requires high accuracy and reliable process that only a small group of staff can handle such tasks. For this reason, the use of computers in commerce or trade in any industries has deliberately increased year by year since they are capable of handling sophisticated tasks like storing and retrieving large amounts of information and at making calculations and designs at highest accuracy. Above condition refers to the development of Management Information Systems (MIS). MIS are basically computer-based information systems that help a business to collect and process data needed by operation of the business and further distribute the processed data to all levels of managements for decision making, planning, implementation, and monitoring of the operation. Similarly, Project Management Information System (PMIS) also possess the MIS characteristics although it differs in terms of objective. In PMIS, the objective is typically to provide complete computer-based information systems for one or more projects. This PMIS might be different from one project to another. Therefore, PMIS is particular designed case by case. Considering the particular interests that PMIS posess and the central roles that PMIS provides to effective project management, therefore, in general PMIS has significant roles in some activities as following: As a computer-based information system, PMIS is able to handle cost, project schedule, data processing, reporting, forecasting and controlling of progress of a project (Project Management Consulting 2002). Comparing the capability and suitability of existing system (Project Management Consulting 2002). The above roles of PMIS can be described better diagrammatically as shown in the following figure: Figure 3.1 Diagram of PMIS Role IV. Project Life Cycle Mostly, an activity has designated completion time. This characteristic is so important since it provides project manager with target that the manager should accomplish. The time limited characteristic is also known as a project life cycle, which describes the time schedule since the project start up until the project phase down. In general, explanation of a project life cycle might come in visual description format as shown below: Figure 4.1 Typical Figure of a Project Life Cycle Source: WTEC. 1996, 'Project Life Cycle', [Online] Available at: http://www.wtec.org/loyola/erato/ch3_3.htm By using this kind of project life cycle, project manager should aware of the "five-year project" rule. However, this kind of serial life cycle has demerits since it provides project manager with a long waiting time. For example, during the first year of the project, it takes time to search for assigned team, required equipments, and facilities (Start up phase). Meanwhile, at the end of the project, the fifth year, the project manager will take his time to concentrate on completing the project, issue report to stakeholders, and disperse project's facilities (disposal phase). This situation causes the project manager to have only three years to assess the progress of the project (operational phase) (WTEC 1996). Another example of conducting project life cycle in information technology area is shown by following table: Table 4.1 Typical IT Project Life Cycle in HP- Compaq Phase Project Life Cycle Activity Start up Phase Concept, Feasibility and Definition: Project Brief Project Managers Budget Management Support Project Plan Operational Phase Design, Development and Commissioning: Project Management Project Development CRM (Customer Relations Management) and Marketing Change Management/Reformation Project Close-Down and Project Review Phase Down Phase Services, Infrastructure and Operations: Project Integration into Services IT Infrastructure Development Applications Development Internet / Intranet Services User Support and Training Standards and Documentation Source: WIPO. 'Project Life Cycle Methodology', [Online] Available at: http://www.wipo.int/it/en/projects/plc.htm Considering the importance of achieving targets that project manager should accomplish, therefore, the project manager should be knowledgeable about critical success factors of the project and handle them appropriately. According to Pradeep Pendse (2004), a Senior Associate Dean-Systems & E-Business, Welingkar Institute of Management Development and Research, a project manager should employ tracking method during the course of the project. The purpose of tracking is to find out whether a project stays on course or not. Under such circumstances, a project manager must try to gather facts about all activities that are associated with the project plan. Therefore, the project manager should allocate time where he and the rest of the team discuss the progress of the project in order to give the sense of forward movement leading to the successful completion of the project (Pendse 2004). However, Pendse (2004) says that tacking method does not relate with numbers. In fact, tracking method does deal with specific tasks or activities, interdependencies between the tasks, and the people who perform those tasks. Therefore, the project manager should be able to identify which tasks are important and tasks that are less important. Below is the information about the critical success factors that relate to the specified performance indicators. Table 4.2 Typical Critical Success Factors of an IT Integration Project at HP-Compaq No. Critical Success Factors of a Project Performance Indicators 1 Progress of project and delivery time % of completed tasks according to targets on weekly basis % of critical tasks per schedule this week % of critical tasks planned to be completed this week but delayed for some reasons Comprehensive/Cumulative figures of above parameters from the start of the project Estimated completion time based on EVA (Economic Value Added) analysis 2 Construction/production, operation and resources productivity Available man days/man hours Loss of man days/man hours The quality and quantity of output per person Needed productivity at a point to ensure the project completion as planned Rework (in man hours) 3 Quality metrics Quantity of defects as a percent of the total code Analysis of the occurred defects Calculation of the impact of defects on other parameters of CSFs including delivery time, production, productivity, cost, etc 4 Cost Figure of used budget to date Estimated cost needed to complete a project based on (Economic Value Added) method Source: Pendse, Pradeep. 2004, 'What to Track and How to Track', [Online] Available at: http://www.expressitpeople.com/20040510/careers2.shtml The table above shows that there are in general four critical success factors for a project that a project manager need to take into account when assessing the progress of a project and plan next strategic steps to ensure the project are completed as scheduled. V. Project Integration Management As mentioned above, a company encounter the time where it needs to integrate the whole business in order to provide superior products and services while maintain its competitive advantage in the market it serves. Under such circumstances, shareholders should encourage the integration of whole business processes and applications from customer relationship management (CRM), financial applications to Human Resource and Sales Force Automation (SFA) to in order to smooth the development steps. In many details, the table 4.3 shows the critical aspects from project initiation to project integration management including project charter, life cycle phases, and project management methodology. Table 5.1 Typical Critical Aspects of Project Integration Management Priority (Based on HP-Compaq Criteria) 4 3 2 1 Area of Investment/project characteristics Low investment/capital expenditure Moderate investment with schedule target Important investment with principal schedule goals Highly important investment with crucial schedule goals Project Charter Plan a MoU between sponsor and Project Manager defining objectives, resources, commitments, and constraints. Categorize proven objectives, cost and schedule targets Determine definite goals, cost and schedule thresholds Determine responsibilities and authorities of Project Manager in line with specific objectives Life Cycle Phases and Milestones Identify project phases, critical points of accomplishments, and deliverables. Identify project plan concerning the phases, delivery time, objectives and success criteria Define the linkages between critical points reviews, updated documents completion date etc Define critical points per events/activities, management reviews etc Project Stakeholders Categorize project stakeholders (customers, sponsors, users, etc.) and define their interests and objectives in order to ensure their needs will be fulfilled Plot the stakeholders' interests into particular initiatives Organize stakeholders 'management plan and assign suitable staff and budget to support it Plan a structured stakeholder analysis in support to a stakeholder management plan The Project Plan Review the previously planned project objectives, strategy, time limits, cost estimation, and human resource plan. Make certain that these parameters are SMART (specific, measurable, achievable, realistic, and time limit) Determine planning steps to develop team ownership, find appropriate method to assess cost and project completion review, use suitable risk management method Determine a strategy that relates task plans, timelines, cost estimation, staffing, estimated completion date in line with planned cost. In addition, also define criteria success factors for the project Prepare a comprehensive documents composing of all traceable project activities Project Management Methodology Stick to project management principles including well-documented reports, a SMART plan, periodic reviews Define rough draft of proposed project management methodology in project plan document. Identify some important systems and procedures of project management Record the project management methodology composing of management, reviews, data collection, etc. Prepare the progress of project management implementation Arrange project management plan composing of method, organizational roles and responsibilities. Establish metrics to trace integrity of project management components. Source: Chapman, James R. 1997, 'Project Integration Management.' Washington. The table above suggests that as projects increase their priority class, the critical aspects of project integration management become much detail in order to ensure that stakeholders' (customers, sponsors, users, etc) needs are fulfilled. Project team from HP-Compaq IT Division should discuss the criteria mentioned above. This situation also suggests that the increasing priority of a project will drive project manager to provide effective management since criteria become much detail and complex in nature. Under such circumstances, the manageability of a project in relation to project communication and coordination becomes more important than just the fulfillment of specific technical performances. In short, the more important a project, the more it demands details information and needs (Wideman, 1990). VII. Project Monitoring and Change Control Once the IT integration project at HP-Compaq has completed, there should be a tool to monitor and assess whether the project is in line with planned master plan or not. This situation suggests the need for a change control system to help stakeholders turn a condition in the project into one they want. Below is a sample of how a company conducts a change control in its project. Figure 6.1 Suggested IT Integration at HP-Compaq Change Control Flow Source: Change Control Process', [Online] Available at: www.processimpact.com/process_assets/ change_control_process.doc The flow begins with the originator who submitted a tested issue or change request to change control board (CCB). Once CCB has received the issue, the change control alters the initial status into "Submitted" ("Change Control Process"). In the new status, CCB then assigns an evaluator to test the issue and find out whether a submitted problem can be reproduced or an estimation of the labor hours need changing or not. At this stage, the system will change the "Submitted" status into "Evaluated" ("Change Control Process"). In this stage, CCB consider whether the proposed change should be made or not. In order to take a decision, CCB needs another input from other stakeholders to strengthen the needs for changing ("Change Control Process"). In case that CCB accept the change, CCB will assign a modifier while shifting the status from "Evaluated" into "Approved". In this stage, a modifier schedules the work while Project Manager discusses any needed changes in the project that affects stakeholders. Afterwards, the system distributes an e-mail to the assigned Modifier and Originator. However, if CCB rejects proposed change, the status is shifted into "Rejected" and CCB distributes an e-mail to the assigned Modifier and Originator ("Change Control Process"). In case that CCB accept the change, afterwards, CCB and Originator consider whether they need formal verification or not. If the answer is 'Yes" then they are to select the verification method while assigning the Verifier. In this stage, the Project Manager informs the new plan, list of tasks, and schedules ("Change Control Process"). However, if during the course, it is found that the proposed change is not feasible at all; Modifier will notify CCB to change the status into "Canceled". Afterwards, the tool will send an e-mail to the Originator, CCB Chair, Modifier, and Project Manager ("Change Control Process"). When the change is made, the Modifier changes the status into "Change Made". Afterwards, Modifier informs Originator and Verifier that the change is made and the Verifier conduct appropriate verification. Once the verification is successful, the status becomes "Verified". Once the Modifier has set the status into "Closed", the tool inform the Originator, CCB Chair, and Project manager ("Change Control Process"). VII. Project Closure The IT integration project at HP-Compaq post merger will be closed once it has provided the designated output. Since the project closure is the formal termination of a project, therefore, it is needed to ensure that all outputs have been delivered and accepted by stakeholders (Tasmanian State Government, 2005). In general, stakeholders of HP-Compaq can follow five steps concerning the project closure as following: Ensuring that Stakeholders Accept the Project outputs/deliverables Ensuring that all activities are completed and outstanding/incomplete activities have been re-assigned Conducting a post-project review to identify relevant issues that are beneficial to other project Project Sponsor should continue its activities until all project closure activities are completely addressed Conducting a project completion celebration in order to mark the end of the project (Tasmanian State Government, 2005) VIII. Conclusion There are two sources of shareholder value: maintaining a positive spread between its ROE and its cost of equity capital and creating growth opportunities (investment in new assets) at a positive spread. Value creation analysis is designed to complement rather than to substitute for managerial creativity and good judgement. Hence, the strategies to be evaluated in each case depend on the nature of the business unit under consideration. The merger of Hewlett-Packard and Compact was considered successful yet controversial. It was considered successful because after the merger was closed in May 7, share price immediately rose following the incredibly improved sales and product line-up (Robinson, 2002). The numbers have evidently supported the positive statement. However, the merger was also considered controversial due to how the merger was carried out, which involved the lost of 15,000 jobs (Robinson, 2002), 17 top executives from both parties (Shor, 2002) and investigations by United States SEC and European Commission (Shannon, 2001). The release of workers and executives was a part of company plan of building new and more efficient management, while the investigations was conducted because some believed that the acquisition process was not done without taking advantage of several unjust influences. The investigations conducted by SEC and EEC have obviously left shareholder and most of all, employees wondering, but the issue is not immediately addressed. In an article by Susan Shor, the company even denied the corporate cultural insensitiveness by mentioning that executives are walking out because of natural and personal reasons. In this paper, we conclude that the core problem of the merger was the lack consideration of employee morale and possibilities of cultural conflicts in company actions. Concerning the situation, this report has shown critical steps of integration management within the merger between HP and Compaq. The steps includes the determination of areas of project, project characteristics, life cycle phases, project stakeholders, project plan, and project management methodology. IX. Recommendations Current management displayed a rather centralized management style. Opinions from economic observers often stated that the merger was not really a merger, but only a way to increase HP's market share and product line. However, the company has managed to justify their actions by increasing product lines and sales numbers. Carly Fiorina, the chairperson and CEO and other upper level management at HP repeatedly stated that people should look at the numbers before making any assumptions. They argued that HP is simply making decisive moves that position them to win the market by offering more values to customers ('Merging', 2001). As the first alternative, we proposed that management maintained their current style and preserves employee and shareholder morale by displaying successes and achievements as evidences that their management style really works. This alternative is considerable because up until now, Carly Fiorina and her associates have managed to display such success in their sales number. The second alternative is taken from management theories, which suggested that 'mergers' seldom works ('Mergers', n.d). Partnership has evidently posed as a better proposal. We proposed that HP change its management style and incorporate a more sensitive consideration of cultural issues and employee morale. Keeping each company on segments they are experienced with, analyzing and addressing cultural issues well (with their norms, values and assumptions), incorporating cultural cost in financial calculations, maintaining clear framework and transparent management ('Why Mergers', 2001) are a few examples of ensuring good employee morale and building a healthy partnership. The third alternative is taken from the suggestion of a business consultant, which stated that the merger tends to eliminates existing values rather than building it. The consultant believed that each segment in the present HP would be a strong competitor inside their specific segment market if they are managed separately, giving room for segmental focus. Therefore, it is better for the company to split up according to their product lines, which would supposedly produce a much larger profit in total. Furthermore, he believed that the merger would have little chance for a long-term survival as a single corporation; however, it could turn loose some very successful 'children' (De Haas, 2001). References Change Control Process', [Online] Available at www.processimpact.com/process_assets/ change_control_process.doc Chapman, James R. 1997, Project Integration Management. Washington. CPMM Communication Plan', [Online] Available at: http://projectmanagement.cornell.edu/Controlling/CPMMCommunicationPlan.doc De Haas, Rudy. 2001, 'HP taking Over Compaq', [Online] Available at: http://comment.cio.com/comments/search Kostman, J. & Schiemann, W. (2005), 'People Equity: The Hidden Driver of Quality', Quality Progress, May, Vol.38, Iss.5, pp.37-42. Lock, Dennis. (2001), the Essentials of Project Management, 2nd Edition, Gower Publishing Limited, Hampshire 'Mergers and Acquisitions Business Integration', [Online] Available at: http://www.tesauromc.com/whitepapers/mergers.htm Mingay, Simon. 2005, 'Effective Communication between IT Leaders and Stakeholders Must Be Structured and Contextual,' Gartner Research. Pendse, Pradeep. 2004, 'What to Track and How to Track', [Online] Available at: http://www.expressitpeople.com/20040510/careers2.shtml Project Management Consulting. 2002. 'Project Management Information System (PMIS)', [Online] Available at: http://www.pmc.gov.au/implementation/guide/guide-stakeholder_engagement.shtml Robinson, Teri. 'HP Shares Rise after Merger, But Challenges Loom', [Online] Available at: http://www.technewsworld.com/story/search Shannon, Terry. 'Shannon Knows Compaq', [Online] Available at: http://www.openvms.org/skc/skcv8n38.pdf#search='problems%20with%20HP/compact%20merger' Shor, Susan B. 2002, 'Most Exciting Execs Formerly at Compaq', Available at: http://www.interex.org/hpworldnews/hpw402/news6.jsp Tasmanian State Government. 2005, 'Closure', [Online] Available at: http://www.projectmanagement.tas.gov.au/guidelines/pm6_12.shtml Wideman, Max. 1990, 'Understanding and Running a Successful Project', [Online] Available at: http://www.maxwideman.com/papers/performance/understanding.htm 'Why Mergers & Acquisitions don't Work', 2001, [Online] Available at: http://www.di-giacomo.com/Merger&Acqusitions.htm WIPO. 'Project Life Cycle Methodology', [Online] Available at: http://www.wipo.int/it/en/projects/plc.htm WTEC. 1996, 'Project Life Cycle', [Online] Available at: http://www.wtec.org/loyola/erato/ch3_3.htm Read More