Analysis of McDonalds IT Innovation Project - Case Study Example

PROJECT MANAGEMENT Project Management Affiliation Table of Contents McDonalds’ “Innovate Project” failure 3 Problem Overview 4 Reasons of Failure 5 Scope Management 5 Stakeholder Involvement 6 Project Manager 6 Executives Understanding 6 The damages/Losses Caused to the Organization 7 Recommendations 8 Conclusion 9 10 References 10 Introduction Information Technology (IT) Projects are difficult to manage, as they are rigid, complex, and exclusive in nature. Without a doubt, hundreds of aspects and variables are involved in the completion or the breakdown of a high-profile project. Additionally, in spite of the remarkable results from corporate investment in the implementation of information systems and technology, the information technology department is the basic source of great irritation, missed prospect, and inadequacy in businesses. In fact, the business management is quarrelling by the IT department more frequently than not. The rotating door in the higher IT management mark at consequently numerous businesses have led to the simply half-joking interpretation such as CIO title stands for “Career Is Over” (Baschab & Piot, 2007; Hughes & Cotterell, 2005). This paper presents an analysis of one of the biggest technology blunders in the context of cost, planning and management mistakes for the people concerned in information technology projects. In this scenario, this research will analyze the McDonalds’ “Innovate Project” failure. This paper will outline the basic reasons which caused failure of such a huge project. This paper will also recommend some solutions for the successful project accomplishment. McDonalds’ “Innovate Project” failure McDonalds’ “Innovate Project” failure is one of the biggest technology blunders in the field of information technology projects. Without a doubt, the majority of businesses do not want to disclose their project’s breakdowns especially regarding information technology project management. However, they can learn many lessons by analyzing their project breakdowns and issues (McDougall, 2006; GunaRanjan, 2010). Basically, McDonalds Restaurants started a large IT project at huge scale and defined a very bright project scope. In 2001, the fast food chain decided to launch a project to establish an intranet for connecting headquarters with far-flung restaurants that would offer them operational data and information in real time. Additionally, this IT project was believed to be an innovation project for the business. In addition, it was expected that a manager at the businesss Oak Brook, Ill., head office would be acquainted with immediately if sales were reduced at a business branch in Orlando, Fla., or if the cooking grill heat at a London restaurant was not hot enough. Without a doubt, McDonalds for all time has been tight lipped regarding innovation; the business did not return calls searching comment for this story; however there was a lot of doubt about its extensive scope. As stated in a research based white paper by Mpower about the McDonalds’ project. In this paper writer states that the consulting Corporation McDonalds hired for untimely planning as well as technology based systems procurement, the plan was to develop "a worldwide ERP system that will ultimately connect each of McDonalds stores. Moreover, this project was designed to connect more than 30,000 restaurants in over 120 nations (McDougall, 2006; GunaRanjan, 2010). Problem Overview McDonalds’ “Innovation Project” was one of the most costly and widespread information technology projects. As stated above, the basic purpose of this project was to establish a real-time worldwide network to connect more than 30,000 restaurants in more than 120 nations with headquarter through the Intranet. This IT innovation system was designed to collect real time data and information from each business store and then distribute it to the headquarters’ management. This data and information were aimed at facilitating headquarters’ business store manager as well as management to efficiently and constantly run and control their business branches in a timely manner. In addition, McDonalds’ Innovation Project” was launched in 1999 with a financial budget of $1 billion and a 5 year plan. However, in late-2002, McDonalds announced the cancellation of this innovation project. In this scenario, the investment of more than $170 million that had previously been spent on the IT Innovation project was lost and between 100 and 200 contractors as well as McDonalds workers working on the project might be discharged or reassigned (GunaRanjan, 2010; McDougall, 2006; IT Project Management, 2008). Reasons of Failure This section outlines some of the major reasons that caused the failure of McDonalds’ “Innovation Project”: (GunaRanjan, 2010; McDougall, 2006; IT Project Management, 2008) Scope Management One of the most important reasons of McDonalds’ “Innovation Project” failure was ineffective scope management. In the phase of preliminary system requirements analysis, the project management might not cautiously recognize whether or not the project had the accurate scope as well as the project could address the present technology and various business related issues. In this scenario, the main issue that was ignored by the business management was regarding establishment of a real time worldwide network to cover all locations, which was not feasible from the start, for the reason that individual nations had diverse IT business and technology based infrastructures. Moreover, the major issues governed because McDonalds’ “Innovation Project” had not defined effectively the elements to recognize the viability of the project (GunaRanjan, 2010; McDougall, 2006; IT Project Management, 2008). Stakeholder Involvement McDonalds’ “Innovation Project” also lacked a great deal of stakeholder involvement. Without a doubt, in order to determine and understand project feasibility and describe its scope, an adequate amount of information and feedback from business store executives in every nation should have been specified. IT Project development team should have recognized whether or not they could tackle present issues and challenges through feedback (GunaRanjan, 2010; McDougall, 2006; IT Project Management, 2008). Project Manager McDonalds’ “Innovation Project” also lacked some of the major project management capabilities. In such kind of huge projects, it is extremely significant to have a qualified and experienced project director in the project where such huge technology based systems and invocation are required. In this scenario, if they would have hired an expert project administrator or project manager, they would have told decision-makers that Innovate Project would not be possible, exemplifying require examining the current IT project possibility methodically from the beginning (GunaRanjan, 2010; McDougall, 2006; IT Project Management, 2008). Executives Understanding McDonald’s “Innovation Project” also lacked a great deal of executive understanding. They recognized the significance of McDonalds’ “Innovation Project” to develop daily process management however did not have enough knowledge and understanding of IT technology as well as had impractical expectations (GunaRanjan, 2010; McDougall, 2006; IT Project Management, 2008). The damages/Losses Caused to the Organization As stated by the Securities and Exchange Commission that filed by McDonalds, the business recognized the project was over and not possible to pursue further. However, at that time they had spent only $170 million out of $1 billion. Additionally, this investment was spent on the consultants and preliminary IT project implementation planning. In addition, McDonalds eventually indicated that innovates termination in a paragraph buried inside a 2003 SEC filing, that assessed the write-off and "managements results to end a long-term new information technology project” (GunaRanjan, 2010; McDougall, 2006; IT Project Management, 2008). Moreover, the overall project progress documentation exposed what the majority of knowledgeable IT project administrators could have stated McDonalds from the beginning of this project: An effort to produce a universal network and offering real-time information to thousands of businesses and corporate stores, where a number of nations that lacked new technology based network structure, were intended to fail. In view of the fact that the successfully completed project was predictable to offer lasting advantages, it was no longer observed as the most excellent use of capital in the present situation, for the reason that the expected system wide price over a number of years was projected to be in surplus of $1 billion (GunaRanjan, 2010; McDougall, 2006; IT Project Management, 2008). Recommendations Information technology project management knowledge and skills can help project managers make best use of their IT and human resources (like that efficiency of applications similar to online resources, word processors or computer presentation systems) successfully as well as competently. This outlines being capable to obtain, analyze, organize, assess and offer information through suitable technology, and make use of information technology to develop the variety and value of communication. In addition, it is essential for IT project managers that they build up their knowledge, capability, and responsibility for using information technology, recognize the function and influence of information technology as well as implement responsible, ethical and legal standards in its usage, and recognize and migrate to the growing emergence of technology as an element of lifelong knowledge. In addition, information technology skills and expertise for IT project managers necessitate the background expertises of library skills and evaluating sources (Baschab & Piot, 2007; Dillon, 2000; Grudin, 1991; Sommerville, 2011). Moreover, for the sake of improving the systems development process through joint optimization, information technology managers need to know about a number areas and aspects regarding the skills and expertise of IT projects. One of the main aspects that information technology managers need to know is that they should understand their clients. The majority of project managers focus on offering the necessary products within budget as well as designated timeframe. However, the real objective of a development project is not on-time as well as not on-budget, but its client fulfillment and real business value. In this scenario, recognizing the benefit of key players and making sure those stakeholders are pleased are vital success aspects usually missing from the work breakdown structure. Consequently, they should pay less attention on the characteristics and purposes of their solution and more on the individuals for whom they designed them. In fact, they cannot offer good service if they will not be familiar with to whom they are serving, what they want to attain, and why (Baschab & Piot, 2007; Dillon, 2000; Grudin, 1991; Sommerville, 2011). Conclusion This paper has presented an analysis of McDonald’s IT innovation project. This project is believed to be one of the biggest failed IT projects. The total budget for this project was approximately $1billion and the management could spend only $170 millions. The project was launched to renovate their restaurant business but it became a huge disaster. The failure of IT innovation project at McDonalds evidently demonstrated that project scope management is essential to accomplish the project productively. This paper has outlined the major reasons that made this project a failure. This paper has also discussed the solutions that can help address these issues. References Baschab, J., & Piot, J. (2007). The Executives Guide to Information Technology, 2nd Edition. Hoboken, New Jersey: John Wiley & Sons, Inc. Dillon, A. (2000). Group dynamics meet cognition: combining socio-technical concepts and usability engineering in the design of information systems. In Coakes, E., Willis, D. and Lloyd-Jones, R. (eds.) The New SocioTech: Graffiti on the Long Wall, Springer Verlag Series on CSCW (pp. 119-125). London: Springer. Grudin, J. (1991). THE DEVELOPMENT OF INTERACTIVE SYSTEMS: BRIDGING THE GAPS BETWEEN DEVELOPERS AND USERS. Retrieved March 04, 2012, from http://research.microsoft.com/en-us/um/people/jgrudin/past/Papers/IEEE91/IEEE91.html GunaRanjan. (2010, July 29). Mcdonals Innovate project Failure - Case study. Retrieved November 27, 2012, from http://whatislife-ilovegod.blogspot.com/2010/07/mcdonals-innovate-project-case-study.html Hughes, B., & Cotterell, M. (2005). Software Project Management (4th ed.). McGraw-Hill Higher Education. IT Project Management. (2008, November 03). McDonalds’ “Innovate Project” failure. Retrieved November 28, 2012, from http://pminit.blogspot.com/2008/11/mcdonalds-innovate-project-failure.html McDougall, P. (2006, Octiber 16). 8 Expensive IT Blunders. Retrieved November 27, 2012, from InformationWeek.com: http://www.informationweek.com/8-expensive-it-blunders/193302693 Read More