Project Turnaround - IT Strategy Management

Putting an IT project back on track

Spiralling costs, slipping deadlines and falling profits. A division of the Datel Ferranti Group was going off the rails. Until interim manager Bill Reeves took over in the driver's cab.

Train travel in the UK is a stressful experience, but in some parts of the country it would be much worse had it not been for a ten month IT strategy management assignment under taken by Bill Reeves, one of the interim managers on Impact Executives' books.

He is a senior executive with an engineering background who had worked for some of the best-known firms in the country before deciding to take up interim management. "I wanted to be free to get things done. After 23 years in the corporate world I'd had enough of company politics and the obsession with reports rather than results," he explains.

Time for project turnaround

Impact Executives put his name forward to the Datel Ferranti Group when it ran into serious trouble with one of its three divisions. Whilst the other two were profitable, they were being dragged down by the problems of a third, Datel Rail Systems (DRS).

With offices in London and Preston, it was primarily a software company responsible for a product with which every rail traveller will be familiar - the TV screen based information system on station platforms that shows train arrivals and departures.

Allied to it is the same information in the form of automated passenger announcements. Like a lot of technical information that we take for granted, producing it is actually a very sophisticated process. "The position of trains is monitored and from that forecasts can be made of arrival and departure times," explains Reeves.

When he arrived at Datel Rail Systems late in 1999 the company was suffering from a number of problems. Turnover had dropped from £25m to £16m and despite the fact that the company was overstaffed, it was seriously behind in a number of key contracts, a situation which was threatening to trigger penalty clauses.

A successful management strategy

Paradoxically, the technical team of software specialists, in-house production people and technicians was very strong, maybe too strong. Engineers can be notorious for failing to understand the management implications of their actions. Though he had no specific experience in software design, Bill Reeves' engineering industry background gave him the credibility with technical staff that would be necessary to mount a successful turnaround management operation.

However, it was not to the 'techies' that Reeves turned in the first instance. He began by discussing the situation with the Datel Ferranti CEO, with the finance director, accountants and with the HR people. They agreed the desired goals and reviewed the human and financial resources that would be critical in achieving them. Thereafter he was left to get on with the job, apart from monthly progress reports to the board. That, he explains, is exactly his preferred style of work.

One of the problems at DRS was caused by over-elaborate software programming and frequent specification changes. The business was unable to keep up with these so he gave a high priority to agreeing new yardsticks with its clients. His team could now start on a revised programme of software design that aligned client needs and Datel Rail Systems business objectives.

More problems to tackle

However, there were other problems to be tackled. Costs needed to be reduced and that inevitably meant redundancies as well as a physical move from a prestigious London office to something much more affordable. The cost reduction target was achieved within three months but Reeves admits that it was, at times a painful process, which involved downsizing the workforce from 180 to 80 people. "It wasn't just a question of handling the redundancies, "he says." We also had to win over those we wanted to stay."

He has found that however painful the process, handled openly and with a full explanation of the business reasons, people will accept sacrifices, provided that something positive is being done about the problems that have caused them.

"Communication is vital at every stage of a turnaround," he stresses. "Some people are going to get hurt, you can't avoid it, but fairness and honesty do limit the damage."

He felt that it would take about six months to put the company back on its feet, but this required a huge effort by the technical staff to design the software. Reeves won their support by leading through example. The design of the software was a seven day a week, 12 hours a day job over a three month period. He shared the burden of IT strategy management support with technical manager Anthony Williams, so that there was always a member of the top team on hand. "It's not just a question of doing the work. At a time of obvious change and upheaval people are worried about losing their jobs. Someone has to be around when the rumours start flying."

The company was getting back on its feet after four months, when the first key customer deliverable target was met, but it wasn't a sudden process. Built into the recovery plan were numerous short-term wins so that the staff could see progress being made. Finally, in April 2000, the business was in good enough shape to be sold to Amey. It is now the No 1 UK market leader in customer information systems.

The Problem

In late 1999 Datel Rail Systems was suffering. Turnover had dropped from £25m to £16m and despite the fact that the company was grossly overstaffed; it was seriously behind in a number of key contracts. The overhead costs were out of proportion to the size of the organisation.

The Interim Manager

Bill Reeves is a senior executive with an engineering background who had worked for some of the best-known firms in the country before deciding to take up interim management. Although not a software engineer, he was an experienced interim manager as well as a highly experienced manager.

The Solution

Reduce cost base and prepare the business for sale. Seven figure savings were made in three months to both cost base and work in production costs. The company was downsized from 180 to 80. In April 2000, six months after Bill Reeves arrived, the business was sold to Amey. It is now the No1 UK market leader in customer information systems.

Bill's advice to clients looking for an interim project manager:

• State clearly the objectives and terms of engagement of the assignment
• Make the desired goals clear to the interim project manager
• Give him or her the authority to get on with the job - "don't micro-manage"

Equally, for interim managers, his message is:

• Identify the key managers you wish to keep in the business.
• Work with them to build an IT strategy to address the critical issues.
• Act fast.