In this six-part series, Joseph R. Czarnecki, project management specialist and senior consultant at ESI International, identifies six top business skills at which every IT project managers needs to excel.
Equipped with a business mindset, clear, audience-specific communication skills and loads of critical thinking, the next step in an IT manager's evolution is looking beyond his or her silo to the intricacies of each project's financial impact on the organisation's bottom line. The average software developer, for instance, has very little insight into the financial aspects that his or her projects have on the organisation's bottom line. And yet those projects can strongly impact the company's financial health.
At some point in an IT project manager's career, one eventually ends up in a management-focused role. In this new position, having a financial focus becomes essential. IT professionals need to understand that financial decisions-at any level-have an effect on the entire organisation.
Unfortunately, many do not have the knowledge and skills to fully understand and contribute to the financial decisions being made throughout the organisation. A 2010 study conducted by the Chartered Institute of Personnel and Development (CIPD), for example, found that 59% of graduates lack basic business skills and commercial awareness.
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- The global state of the Project Management Office.
- The global state of the PMO: the UK perspective.
- The global state of the PMO: the IT perspective.
And a survey by the UK's premiere body on management and leadership, the Chartered Management Institute revealed that 68% of UK managers surveyed called themselves 'accidental' managers who had no intention to become a manager at the outset of their careers. Further, 63% said they had no management training before assuming their senior-level position.
Only 20% claimed to have any type of formal management qualification at all. Given that most board members typically come from the realm of HR and finance, knowledge of financial management is clearly one qualification every manager should have.
So what can IT managers do immediately to increase their financial awareness? It starts by asking these questions:
- Do you know what the key elements are to reading an organisation's balance sheet?
- Can you identify how your projects could impact the revenue or even the profit?
- To what degree are you concerned about the business outcomes that your work supports?
- Are you successfully identifying and correctly analysing business problems?
- Are you incorporating the potential financial impacts on the organization when looking at developing appropriate solutions?
- Do your projects have a realistic estimate of the work effort and costs necessary to complete the project successfully?
Sharing and adding resources, outsourcing, and paying for over-time all add to the financial burden of the project and will directly (or indirectly) impact the organization financial goals.
IT Professionals need to focus on financial outcomes by setting realistic and measurable goals and objectives, estimating and budgeting the projects more realistically and by learning methods for tracking and reporting progress. They must be aware of organisational metrics used to track financial performance-and how those metrics are applied throughout the organization, including their own projects. A significant part of being "business savvy" is understanding basic financial principles and applying sound metrics to track and report performance.
Having a 'business mind', thinking critically, communicating efficiently and adding financial literacy is still not enough to ensure organisational health. Succession planning is equally important. Coaching and mentoring, the fifth skill in any IT manager's toolbox, will be the subject of the next article in this six-part series.
Joseph R. Czarnecki, PMP, MSP Practitioner, Senior Consultant, Global Learning Solutions - EMEA, ESI International, leads the development and customisation of learning programmes including courseware, executive workshops, coaching programs and assessments for many of ESI global clients. As a subject matter expert and recognised thought leader in project management, Joe has authored various professional articles for trade publications. He is a member of the PMI-UK Corporate Council. http://www.esi-intl.co.uk
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Computer Weekly study: The state of UK IT project management (2003)