Project Management and Deployment
Database implementation specialist Richard Winter, in his article titled "Think Systematically," provides a compelling argument for why proof-of-concepts lower risk and reduce the chance of poor decisions. He does so through the a compelling analysis using decision trees combined with probabilities of outcomes and expected value calculations to demonstrate the economics of two distinct decisions, a full-scale proof-of-concept or work that proceeds immediately to implementation. Winter demonstrates the delays associated with proof-of-concepts are well worth the increase in expected value of a project.
In his example of a data warehouse implementation project, Winter makes several critical assumptions. First, he assumes that there's a 50/50 chance that the project will be a success if proceeding directly to building the data warehouse. Secondly, the proof-of-concept...
Finally, if the proof-of-concept produces results that show that the project will not meet all business requirements, the project will either be modified or postponed/cancelled.
Although a simplification of a complex decision tree analysis, the following points are worth yof note in Winter's calculations. The loss associated with a system failure without a proof-of-concept is much higher than the cost of a proof-of-concept. In Winter's example, the proof-of-concept is $2 million vs. The cost of the failure which is $10 million. For a project that moves beyond the proof-of-concept, the probability of success increases because necessary adjustments are identified. These modifications may either lower the business benefit of the solution or increase the technical costs…
