Project Management vs. Program Management: What is the Difference in Digital Transformation?

Written By: Eric Kimberling
Date: March 20, 2023

When embarking on a digital transformation, we oftentimes focus on project management, which is a really important part of the process. However, project management is quite different from program management: effective program management is the key to success for a successful digital transformation. So, what exactly is the difference between program and project management? 

Organizations going through digital transformations typically focus on project management first: how do we get the right manager, ensure the right plan, and allocate resources? However, it is important not to miss out on the bigger picture of an overall program. Program management becomes even more critical in these cases. 

So, what we want to do today is talk about the difference between project management and program management. we will unpack these differences so that you can define a digital strategy that encompasses both, ensuring your success in your digital transformation journey.

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Software Project Management

To start, I want to talk about project management and, to clarify and be more specific, I'm going to call this software project management. This is essentially what most of us think about when we hire a system integrator or a software vendor that's going to manage the software implementation. This is where we get into things like technical configuration, design of the software, technical testing of the software and ultimately go-live of the software.

This is not an all-inclusive project plan but it's important to understand that when you hire a system integrator and a software vendor they're really just the Project Lead for a technical workstream; therefore, project management is important here but it's only one piece of an overall program. It's important to understand that if all we do is focus on this then we are underestimating the amount of effort, resources and tasks needed for a successful transformation.

Next, we are going to talk about what some of the other components and work streams are within program management.

So, as we slowly start to unpack what program management is, I'm going to start by just saying we're going to have an overarching PMO. Typically, you want to have an overall enterprise program that's going to manage the entire program. Now, what we want to do is talk about how this all ties together. Certainly within your overall PMO (and even if you don't have an internal PMO - by the way, this is something that you want to make sure you establish) is making sure you establish a Program Management Office that can manage the overall program, including your software vendor and system integrated resources here.

The software vendor software project management reports up to the PMO typically, and then that basically is the question of well what else is there? Why do we have a whole PMO just to manage this? Well, the reason is because there's a lot more than just this. Firstly, I'll say that software project management may be multiple work streams so you may end up finding that you're not just deploying one technology; you're deploying a best-of-breed model or you're deploying a core back office ERP system but then you've got some third-party bolt-ons on top of that. So if you are deploying multiple technologies, you want to make sure that you recognize and identify that there's different threads - different software threads - that have their own plans which ultimately need to be integrated up to the overall program. That's the first thing - you may have multiple technical and software work streams depending on what it is you're deploying.

Now secondly, even if you're just deploying one system but especially if you're deploying multiple systems, you're going to have a segment for... call it the technical aspects that are not software specific and specifically what I mean by this is overall system architecture, data, and integration.

So, it's really that overarching thread that ties together multiple technologies and even within one technology it ties together the different modules within this technology as well as any third-party bolt-ons you might have on top of that - that's really the architecture piece. We're talking about solution architecture; how do these systems tie together not only the new systems you're deploying but also in the interim while you're deploying new technologies? Chances are fairly high that you'll need some sort of interim integration points to your third-party systems or legacy systems. A lot of those systems, if not all of them, may eventually go away but as you go through the transformation most organizations need to have that interim integration built, so you need to have an overall solution architecture that defines how this is all going to tie together - the different technologies, the different modules within the same technologies and how they're all going to work together.

You also have your data and analytics - we'll call it - which is really just taking your old legacy data, making sure you clean it up, map it to the new system or systems and then ultimately define what kind of analytics you want out of those new systems. So again, it does touch this part over here with project management but typically this is out of scope with a software project manager and a software-focused workflow stream.

The other piece within this is the overall integration which is becoming an increasingly important function in an underrated function within digital transformation on the technical side. Even with the same software vendor, a lot of these software vendors have third-party systems that they've acquired that still have to be integrated with the core ERP or enterprise technology. So integration is very important especially if you're deploying a best-of-breed model or you're using business intelligence and data analytics tools on top of a core enterprise technology. This is another work stream and this is just a summary of some of the activities within this work stream that's not software specific but it's very technical in nature; it needs to integrate with the overall PMO and program plan to augment what's being done here on the Software Project Management side of things.

Organizational Change Management

The next project within an overall program that needs to be managed for successful digital transformation is Organizational Change Management. This deals with the people side of change, beyond just training and communications.

When you hire a software vendor or system integrator, they will tell you that they are going to help manage the change, usually in the form of Technical Training - teaching people how to use the new system and perform transactions. However, this should only be one part of an overarching Change Management Plan. It should also take into account change readiness - what kind of organization and culture is it today, what are they trying to become, and what potential sources of resistance might come along with that?

Another important workflow within Change Management is Change Impact - what the current state is, where it's going in the future and how different work groups, departments and individuals within the organization are affected by this. This needs to be done before the Technical Training can take place, so people understand all of the changes that will occur. Too often software vendors and system integrators jump straight to this without having done enough change impact analysis. This creates a lot of resistance and backlash from employees who aren't ready for sudden changes.

That statement, by the way, is more true the older your technology is and the more of a leap you're making in terms of upgrading your technologies. And then, a final work stream I'll focus on today (although this isn't every single work stream within change management that I'm talking about but some of the highlights) is organizational design. So, as we're defining the change impacts, we're typically doing that in conjunction with business process improvements; and as we're defining what the improvements are, we're identifying how people's jobs are impacted and we're also defining how the new organization is going to look - what are the roles and responsibilities?  I'm actually going to call that out as a separate call-out here: roles and responsibilities in this new organizational future state. And again, we need to understand this as an organization - our people need to understand this so that, A) they aren't alarmed by some of the changes they're facing as part of the transformation, but B) so we can get more business value out of the transformation and this massive investment we're about to make in new technology. So, organizational design - roles and responsibilities - is another important thread within change management.

Business Process Re-Engineering

So, we've talked about software project management, architecture, data and integration change management; now last but not least is business process re-engineering. This is the whole business process thread of how we are going to change our business processes and what those processes will look like in the future. People often think that they don't need to do this because they're already doing it over here when deploying new software, however there is some truth that this will drive what their business processes will look like to a certain degree. If you don't have a top-down vision of what you want your processes to be regardless of what technology you deploy then this work stream will quickly become aimless and out of control, going over budget and taking more time than it should.

Today's modern ERP systems are more flexible than ever before and even the simplest workflows that we think should be standard are not necessarily so anymore. This is why there needs to be clarity on what you want your processes to look like; otherwise this work stream will become difficult from both a human adoption perspective as well as integrating different technologies in order to improve business processes. This is a core fundamental aspect of an effective digital transformation and here is where you define your current state processes.

You don't want to spend a ton of time here, but you do need to understand where you are today. Partly because part of what you do today in most organizations is value there. A lot of times, executives and organizations as a whole think "Let's not worry about this because this is our future state over here. Let's focus on the future state." Fair enough; you want to focus on the future state, but you do need to understand where you're starting from because there's a lot of value and core competencies that have been built up over decades - if not longer - that you want to preserve. And then, of course, there are improvements that you want to make: pain points and deficiencies in your current business processes that you want to focus on improving. You want to prioritize what those things are, where the real business value is, and what the business case justification will be - all this is an important part of defining the current state, which then leads us to the future state.

This is exactly what it sounds like: this is us defining what our future state processes are, so that now we can bridge the gap between current and future state to do our change impact. Now we have clarity on how we're going to deploy technology here and there; it starts to pull together the entire transformation in that way. And then, of course, I mentioned a moment ago that you've got your business case. This is where you quantify what the ROI is, what kind of business value you expect to get out of the transformation, where you're going to get the business value and - ultimately - you use this as a tool to manage the business benefits realization as you go through the transformation, and even after.

This is so important because it not only helps give clarity for business processes in order to help drive and enable some other work streams but also gives us project governance controls that are related to PMO or program management office. That's what I'm going to talk about next.

Program Management

Now we've talked about the different pieces of an overall program, discussed how software project management is different from other work streams, and why those other work streams are important. Program management comes into play when there is a need to tie all of these different streams together. This role might be filled by an SI or a system integrator, software vendor resource, who is your technical project manager. However, you still need someone providing the overall program management that ties together all of these pieces. 

There are a few different components of program management here. One is making sure that we have the project plans aligned across these different work streams. You have a software vendor here that's going to come together with their proposal or timeline of what they think the technical implementation looks like. You might also have multiple software vendors doing the same thing if you have multiple systems being deployed. The architecture, data migration, integration, will augment what's done here and will determine what the overall full plan looks like as well as the full duration and timeline. Change management of course is its own animal and it needs to be integrated with the overall transformation effort. Business process improvement is also critical and these three components are often the most likely to slow down a project, create disruption, and cause it to take longer than expected. 

I don't want to say that delays or budget overruns are rare here, but when they do happen it is typically because there are issues that are affecting one piece of the project. This is yet another reason why you need a solid program management office. The PMO is important for ensuring that we have project governance and controls in place. For example, the business case gives us clarity and direction; if we need to pivot or make decisions about scope, then having this document as a foundation will help us make tangible business decisions. Furthermore, any changes that come along with the rest of the project can be managed through the use of this business case as a project governance tool. In short, the program management office plays an integral role in terms of program governance as a whole. 

Essentially, what the Program Management Office is, is a way to tie together the entire operations or set of workstreams and different projects within the overall program. It also incorporates project governance with a project charter, the overall program plan, business case, overall vision and strategy for the project, resourcing plan - all of which are essential from a Program Management perspective. More importantly however, is that by having this Program Management in place it enables you - the implementing organization (not system integrator, nor software vendor) - to have control and ownership of the overall program. This provides your organization with buy-in and support as well as control over the overall program in order to ensure its success. 

So, what does this mean for your digital transformation? Well, first of all it means you want to open up your mind and look beyond software project management. More often than not, software vendors, system integrators and value-added resellers propose a plan that focuses on this. However, your transformation typically will entail all the other stuff, including program management. You want to make sure you have a full program plan that integrates all these pieces. You also want to make sure you have project governance in place and program governance in place and that you ultimately staff this in a way that allows you to have ownership of the overall program.

Perhaps most importantly, the reason why program management is so important is because it allows you to focus on those things which are more important for success than just technical implementation. This is important but ultimately these items are more crucial for success; if we do them really well then the software project management and the architecture, data and integration work streams are likely to come together better. So, essentially what it means is you want to be sure you have a comprehensive program plan that integrates all the pieces that are important for success, you have proper governance in place over the program as well as ownership of the program by an executive within your organization.

Overall, having a good understanding of these aspects will help ensure success with your digital transformation project. Thus, it is important to focus on these areas when planning and implementing any digital transformation initiatives.

If you are looking to strategize an upcoming transformation or are looking at selecting an ERP system, we would love to give you some insights. Please contact me for more information eric.kimberling@thirdstage-consulting.com

Be sure to download the newly released 2023 Digital Transformation Report to garner additional industry insight and project best practices. https://www.thirdstage-consulting.com/reports/2023-digital-transformation-r

Kimberling Eric Blue Backgroundv2
Eric Kimberling

Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.

Author:
Eric Kimberling
Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.
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