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What is risk management in IT project management?

Altkom 7 min Read

With the accelerating development of information technologies and the growing needs of users, IT project management is essential, regardless of the size or type of project. Taking this further, risk management is an integral part of IT project management. In this article, learn what is risk management in an IT project and what are its main methodologies. 

Read on to find out:

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What is an IT project?

A project is a set of coordinated activities and actions that mobilize resources within a specific time frame, with a beginning and an end, in order to meet a clearly identified need.

For an IT project, this is a goal to develop new software or install a system solution, such as ERP (enterprise resource planning) or CRM (customer relationship management). This type of project usually requires these several steps to follow:

  • Defining needs and requirements
  • Other specification
  • Design
  • Development
  • Delivery
  • Security check
  • Load test
  • Performance testing
  • Monitoring

[su_service title=”Check also:” icon=”icon: lightbulb-o” icon_color=”#bbe2ef”] If you’re interested in learning when is the best time to release your product, be sure to check article about MVP.[/su_service]

What is IT project management?

Technology is often expensive: McKinsey found that nearly half of all IT projects go over budget (The art of project leadership: Delivering the world’s largest projects, 2017). That’s mainly caused by the errors in IT management which lack the know-how of several areas like accounting, finances, sales, etc.

IT project managers face challenges that are very specific to this sector:

  • Constantly changing technology makes existing IT projects obsolete
  • Lack of communication and shared vision between IT and business leaders
  • Setbacks and steep learning curves as team members learn to use new technologies
  • IT projects typically have more dependencies than other projects within an organization. They’re more complex and harder to track, and the slightest hiccup can bring the entire project to a rocky end.

Now for the good news. Success rates have been improving for some time. Money wasted has dropped by 20% since companies started managing IT projects differently than other processes (The Impact of Project Management Methodologies on Project Success, 2017).

A good example is American Airlines which decided to increase its visibility of divisional and global priorities. For this reason they implemented resource IT management for all the fields:

  • time entry
  • resources
  • capacity planning

This way, the company increased the 10 percent of their IT labor to 20 percent. It translated to a multi-million-dollar net revenue. (Planview, 2017).

What does an IT project manager do?

IT project managers help companies achieve their strategic goals through technology. They are responsible for planning, implementing and managing technology-driven projects. This includes:

  • allocating resources
  • communicating with teams and stakeholders
  • people management in projects
  • time entries
  • delivering/executing projects on time and on budget.

Depending on the industry, they may also be in charge of specific responsibilities. For example:

  • Manage hardware and software integrations
  • Measuring the results/impact of technology solutions in use
  • Protecting systems from security breaches and data risks
  • Overseeing network upgrades

But how is IT project management different from other types of project management? The short answer is the complexity of IT operations.

Why is it important to manage project risk?

In the IT sector, risks come from losses or damages that may occur following many factors like:

  • lack of specialized personnel
  • poor communication
  • weak cybersecurity
  • the exploitation of a hardware or software vulnerability.

This is no easy challenge and a lot of responsibility and therefore it is necessary to implement appropriate measures. To take this further, a person responsible for management should be acquainted with IT processes as well as all the threats.

The way IT systems are developed, integrated and managed is changing dramatically, and for your organization to be both proactive and reactive, you need to integrate IT security into the infrastructure and product lifecycle as early as possible, as well as into your risk management strategy.

By helping you adopt predictive analytics and automation tools that monitor your infrastructure, we can also reduce the risk.

Operations teams can use predictive analytics to proactively identify and resolve issues before they affect your environment. it’s very important to eliminate it in time, as it can have long-term effects that can result in bringing the project to the end. Not only that, it can present a real threat to the company’s security, credibility and financial liquidity.

With proper risk management, feedback is fast and efficient. It does not slow down the product life cycle and can also be used to resolve identified issues.

IT Project Management — methodologies

There are many methodologies in project management, such as :

  • Traditional methods: “waterfall”, critical path, etc; usually chosen for the smaller and upfront planned projects
  • Agile methods: Scrum, Kanban, Extreme Programming; best for the complex projects that need special attention to their management
  • Adaptive methods: Event Chain methodology, Extreme Project Management.

Some of the methods are more often used in IT project management, such as the Agile Scrum method, which offers great visibility and allows the team to be more reactive.

Here in Altkom this is our most common choice as it applies very well to the development cycle of an IT solution and puts a great emphasis on risk management. As per our experience, this is the best method to ensure that risks aren’t a serious threat for the project’s health but even more so, it helps to reduce costs as much as possible by applying the most optimized approach. By using Agile methodology, you are well prepared for your risks but also know how to eliminate them before they are even a threat.

How do you manage risk in agile?

Agile Methods are much different than “classic” risk management in that they approach the risks of an IT project in a much more offensive way. The project is organized so it can remove the strongest risks as soon as possible, those that threaten the most to compromise the smooth running of it.

Knowing how to manage risks is a good project management practice that has been taught for many years. But why is that usually talked about with a mention of Agile?

Let’s break it down to some points:

  • Because a few years ago, Agility gave risk a prominent place: risks drive the project, the content of the iterations, and therefore impact the activity of each of us (from the developer to the tester, from the ergonomist to the Customer, etc).
  • Because Agile best practices, coming from SCRUM or XP (short iterations, incremental delivery, daily scrums, visual reporting, continuous integration, customer feedback) are very effective weapons to face the risks inherent to any IT project.
  • Because in the field, risk analysis must be conducted with special awareness. Agile pushes the project to the offensive, doesn’t let it go backward and protects it from the groundless PMI (project management institute) recommendations.
  • And because in the end, risk management applies everywhere: small or large projects, IT or not; therefore, Agility becomes a very popular and effective way for almost any project.

If you are interested in managing your IT projects with us, consider contacting our Altkom team !

Our main goal is to keep up the best communication with our clients to best understand their needs and priorities. As result, it helps us to best understand the risk for their project and therefore eliminate them with agile solutions.