The Real Story Behind IT Implementation Disasters

This article is Part II of a series of 3 articles outlining the pitfalls of implementing systems projects, and ultimately, how to avoid them. In Part II, Business Improvement Consultant Anne MacLeod explains some common approaches to managing IT projects, and why they often fail.

Part I  |  Part II  |  Part III

Cost overruns...late projects...faulty vendors...dissatisfied users and customers - do any of these problems sound familiar?

Over the past couple of years, BICS has met dozens of organizations that have experienced these types of problems. Inevitably, there were differing opinions as to who or what was to blame for IT disasters. The answers can be found by looking at the root of the problem.

There are several factors that contribute to whether or not a project will be implemented successfully. In our experience, we've found a number of truisms between business people and IT people. These are:

• Despite high IT project failure rates, there are business competitors who successfully "harness" technology, giving them a competitive edge. Success is out there.
  
  
• The pace of technology accelerates every day, decreasing the life expectancy of both the tools and the people who maintain them.
  
  
• Systems people face the continuous challenge to recruit, train, retrain, and retain personnel, with minimal impact to the organization.

Taking these factors into account, it is clear that companies must invest in IT to survive. If they don't invest, their competitors will. By the turn of the millenium, Companies had reacted with a number of trendy solutions, without guaranteed success:


Outsourcing
System Integration Projects
Re-organize IT

Outsourcing

Outsourcing was a huge trend in the 90's. Business saw it as a way to control costs, and control IT people from "growing an empire" unto themselves. It was perceived as one of the only ways to make IT accountable to the business, like any other vendor. Systems departments saw it as an obvious threat to their ongoing livelihoods.

When a decision is made to outsource, the business must clearly understand its needs before articulating them to the outsourcer. Poor communication often results in the following scenarios:

• The business does not achieve the cost savings it anticipated. Sometimes the costs even grow because the outsourcer must make a profit to sustain itself.
  
  
• The business perceives a reduced level of service, as the outsourcer adds a layer of "bureaucracy."
  
  
• The business perceives the outsourcer as promoting technology for technology's sake., The outsourcer suggests new and improved technology at higher than expected cost - with difficult to quantify business value.

System Integration Projects

Business issues like Y2K were moving numerous organizations to deploy major system-wide applications such as SAP and Peoplesoft. These applications were perceived as the solution to integrate different corporate systems, standardize local systems, and solve numerous business problems with one integrated solution.

Despite high expectations, these are often the results:

• The project goes over-budget and requires millions of dollars for completion.
  
  
• The project takes months - even years - to complete.
  
  
• The business discovers that it is complex and costly to change the deployed application.

Re-organize IT

Many organizations tried a variety of organizational methods to "control" IT and make it more accountable to the business, such as:

• Have IT report through the CFO, with the perception that putting the accountants in charge will control costs.
  
  
• Have IT decentralized into the different business units to make them more accountable to the business.

Unfortunately, these arrangements often lead to the following results:

• Placing IT under the financial arm of the organization is cost-effective. However, the systems group has deteriorating infrastructure, responsiveness and ultimately - service - over time. The business may ultimately be confronted with the enormous cost to "restructure" itself to accommodate IT.
  
  
• Decentralizing IT into the Business Units will eventually lead to lack of integration and consistency. Some areas of the business will have better infrastructure and applications than others - which may not be reflective of the business priorities. Over time the business may be confronted with enormous costs to re-integrate itself as CRM applications become incongruent with corporate business processes.

While some of the above strategies addressed some IT cost issues, they did not consistently align IT with business practice and ensure return on investment.

Finding the Solution

If any of these challenges sound familiar, you are not alone. BICS has met dozens of organizations that have experienced IT project implementation mishaps. The first two articles in this series explored the perception and realities of IT project mistakes. What are the solutions to these mistakes? How can companies prevent these mistakes from happening before the implementation stage? Please read Part III of this series, where we identify some of the root causes of IT system project failures and the challenges to address them.

Part I  |  Part II  |  Part III