Part I — The Organizational Factors
Run an Internet search for “IT project failures” and you will see page upon page of entries recounting the woeful state of information technology project implementation, along with the catalog of casualties. The statistics are scary. Some estimate the rate of IT project failure as high as 70% or more, others contend it is far less. While some respected and credible sources cite shockingly high failure rates, it is difficult to know an accurate number, as too many sources of this information rely on small samples and questionable surveys that can mislead. There is also the definition of “failure”: some projects were undeniable failures that wrecked (or almost wrecked) the organizations undertaking them; others failed in other ways –vastly exceeded their initial budget, came in awfully late, or caused business disruption with severe and long-lasting effects. Still others ran into trouble, but delivered the desired value to their organizations and made them better. What is well established, however, is that out-of-control IT projects happen at higher than tolerable rates. Even in the best-run companies, they have caused major financial losses, and cost many CEOs their jobs.
Worth noting is that the failed technology projects that usually make the news are not purely “technical” (i.e., infrastructure), but involve enterprise software (ERP, CRM, SCM, Digital Transformation, Analytics and AI) that permeates all facets of an organization. Hence the attention they elicit, and the scrutiny they warrant.
There is not a definitive set of answers to “why IT projects fail”, as the circumstances of each project differ. But the autopsies of troubled projects, and testimonies from business and IT leaders, corroborate several key contributing factors. For simplicity, we’ll classify them as Organizational and Technical factors.
The Organizational Factors
System implementation is an across-the-board organizational undertaking, aimed at realizing the desired value from a new system. Preparing the organization, mobilizing people, setting and managing the stage for such a project are crucial to its success. Evidence of missteps in these activities encompass:
Mis-characterization: Large IT projects are too often characterized as technology endeavors, often led by the Chief Information (or Technology) Officer, with participation from middle-managers representing their functional areas to ensure that their business processes adapt to the new system. The reality is that these are massive Change projects intended to transform the way an organization makes its product, manages its suppliers, interacts with its customers, and handles its internal processes. The work of every employee is likely to be affected.
Top-down Vision: The CEO sees it, maybe another one or two high-ranking executives. Everyone else either does not see the value of embarking on such an arduous journey, or is skeptical and fearful of the outcome. That lack of shared vision and buy-in, often coupled with ambiguous sponsorship from the top, quickly translates into apathy or lip service down the organization.
What does this mean for me? In the absence of a compelling reason for change and a convincing sense of urgency, self-preservation inhibits humans from destabilizing their working conditions by tampering with the tools and systems that help them succeed, or cause them to lose their jobs. They will resist, and may even exert covert (or overt) efforts to derail the project.
All Roses and No Thorns: The purported benefits of IT projects can be impressive. Even when the business case cannot be firmly made, there is often a high opportunity cost for not upgrading technology or transforming business processes. But there are also serious pitfalls that seldom receive the adequate focus by overconfident organizations that believe a “can do” spirit is enough to prevent catastrophes. Enterprise IT implementation is hard work. Underestimating the cost, the timeline, and the magnitude of disruption to the business and the organizational culture, can be devastating even when the benefits are eventually achieved.
Broken Guiding Coalition: In a seminal Harvard Business Review article, John P. Kotter stressed the importance of a “powerful guiding coalition”, a small group of well-placed individuals, with active support from the head of the organization, that “come together and develop a shared commitment to excellent performance through renewal” as key to successful transformation projects. Too often, the steering committee that forms around a project comprises people with competing agendas, private doubts about the merits of the project, and largely motivated by reducing risk to their functional areas, careers, and bonuses.
Clever People Behaving Badly: In a case I have seen, the talented division head of an international corporation, who from the onset expressed doubt about the benefits of a global transformation project, not only refused to walk the talk and share in the grand vision, but appeared to do everything possible to undermine the project. His behavior was not lost on anyone in the broader organization, nor was the fact that he was given a pass by higher-ups because he was a rainmaker. Morale soured as lower-level managers concluded that not everyone is living up to the same commitment, cynicism grew across the company, and eventually the entire effort collapsed.
Organizational Discipline: Some organizations are highly successful because of an entrepreneurial culture that encourages maverick behavior and bucking the rules. That success ingredient becomes perilous in technology projects that require high discipline, and adherence to scope, budget, and timelines.
Careful to Whom You Trust Your Fate: During the scoping of an ERP implementation, I stopped by to brief the CEO of a newly acquired company on the business design that was about to be configured in the new SAP system at his division. He was alarmed and worried about how this would cripple his business, and only calmed down when I pointed out that the people he had assigned to the project came up with that flawed design. It turned out that those people were about to be laid off until the company found a new use for them on a system implementation team. They were replaced the very next day.
Reality Check: In an infamous story that has become a textbook case on IT project disasters, confectioner Hershey’s botched system implementation came down to three principal reasons: 1) Squeezed deadlines: a project that was scheduled for 4 years was forced into 30 months; 2) Wrong timing: the company went live at their busiest time and missed order fulfilment for Halloween and Christmas; and 3) Approach (Big bang): to complete the implementation process, Hershey’s opted for a big bang implementation simultaneously with a CRM and Supply Chain Management packages even without testing some of its modules of the systems. Stretch goals can motivate, but biting more than one can chew can be counterproductive.
Author: Bassam Fawaz
Stay tuned for Part II on the Technical Factors that imperil IT projects.