Why Businesses Say IT Is Not Very Innovative

Those of you who read my blogs know I write often about the human aspects of IT project failures and the lack of open discussion between technologists and their business colleagues.  Well, here comes some more evidence.

Information Week published an article entitled “Heroes Wanted,”  which is about the unfortunate lack of technological innovation at a time of great business need.  In this well-researched article which is based on responses from both IT and non-It people, we learn even more about the disturbing lack of synchronicity between the need for and delivery of technology.  Data collected showed a ‘disparity between how IT views its performance (not bad) and how non-IT pros view it (not good).’

What did they learn specifically?

IT Project Cost and Delivery Not Meeting Expectations:  2/3 (a low number in and of itself) of IT providers thought users were happy with quality, timeliness and cost, but just half of the business managers surveyed agreed.  Furthermore, more than half of the business managers still believed IT is still primarily a support or maintenance organization.  “Again and again, the data shows a disturbing gap between IT’s perception of itself as reasonably innovative and effective and non-IT’s lukewarm view.”

IT and the Business Look at the Same Situation Differently:   for every success story reported in the survey by IT, ‘there were as many cutting comments describing the IT staff — even from IT pros themselves.’  That is, despite seemingly heroic efforts by IT and no customer complaints, IT is still not seen as cutting the muster for business innovation purposes.  Indeed, IT is viewed as being a drag on innovation.  “The user perception is very low and generally this perception is ignored [italics mine] by senior IT management as not being of importance.”  How can the IT function be so cavalier about disregarding survey after survey that business needs are not being met?  This is clearly one reason businesses turn to outside providers and pray the cloud answers all their questions and why there’s constant pressure on IT to reduce its costs.

Where Does the Tension Lie?  While there’s little debate that IT is critical and that everyone acknowledges technology is of growing importance, it’s difficult to find the cause of the different views, though here are some thoughts:

  1. IT has done such a great job cutting costs, the achievement can ‘run counter to the concept of implementing new technology to drive innovation.’
  2. By making IT more cost efficient, it can ‘result in devaluing IT as the source of those efficiencies do not flow back to most organizations.’  So lots of effort by IT not matched to the business benefit.
  3. While businesses talk about revenue and market share, IT is stuck describing how it reduced costs — not at all what excites wise shareholders.
  4. IT projects often don’t demonstrate direct business benefit.  For the business to really appreciate the work IT does, ‘discretionary spending has to be evaluated just like you look at other discretionary resources, like capital.’  (For the number one book on this subject, see George Westerman’s The Real Business of IT:  How CIOs Create and Communicate Value.)
  5. Technologists don’t view themselves as decison-makers!  The survey revealed that though nearly 85% of businesses want IT to be decision-makers and help with decisions, only 2/3 of IT agreed.  I don’t have an answer as to why IT would pass up an opportunity to participate in an activity that would raise their profile among the business.  Perhaps technologists are more comfortable around infrastructure and purely technical choices.  Maybe they don’t want to subject themselves to the risk of being wrong when in the sights of their business partners.

The only response to improving IT performance and its stature in the eyes of the business is to ‘work closely with business executives to develop innovative applications.’  While this is statement is neither startling nor new, it’s what’s needed on a consistent basis to educate businesses about IT’s essential value in business innovation and growth.  IT must participate daily to face doubters and demonstrate how technology-driven opportunities can lead to market success.




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People's Behavior Influences IT Project Success

Many months ago I quoted IBM and McKinsey when I wrote about the influence personal behavior has on IT project success and direction.  Recalling those two quotes:

  1. According to an IBM study, only 40% of projects meet schedule, budget and quality goals.  Further, they found that the biggest barriers to success are people factors.
  2. McKinsey found that ‘while an increasing number of non-IT executives give IT a score of 61% for basic services like email and laptop support, only 26% rank IT high in the most vital area of proactively engaging with business leaders on new ideas or systems enhancements.’

Recently two more articles have been written by McKinsey which identify other — and less obvious — influences of human behavior on IT projects.

In their McKinsey Quarterly, they report on the Board’s role in the technology agenda and on delivering large-scale IT projects.

Drawing on the key points which identify the influence of individuals — which I believe is the primary source of IT project failures — it’s clear that the notion of the role participants play (as opposed to the technology itself) is perhaps gaining some notoriety.

From “Elevating Technology on the Boardroom Agenda:”

  • We know from other research I’ve reported on that there is not a close integration of IT and business planning.  Thus, “Boards are also beginning to take a strategic view of how technology trends are shaping their companies’ futures…Deeper board involvement is also serving as a mechanism to cut through company politics and achieve endorsement of larger, integrated technology investments.”
  • Boards are having a ‘more frequent and more constructive role in IT strategy.’  Conversations are changing with ‘executives suggesting that a significant gap exists between the conversations their boards ideally should be having and the ones the boards actually were having.’  In a sample of nearly 1600 respondents, nearly half of boards discussed IT topics only once or twice a year.
  • 12% of boards do not address technology or IT issues at all!  This compares with only 28% who discuss how technology will affect the industry, though they agree an ideal rate of frequency is twice as often at 53%.
  • Clearly, given the importance of technology, ‘many companies are considering a more structured approach to board engagement.’  In fact, some national governance bodies agree.  For example, South Africa’s ‘code of company governance mandates regular interactions between boards and executive management on technology topics.’
  • Because boards are becoming more involved in technology matters, ‘it means that corporate directors, just like their CIOs, have to raise their game, are seeking to better understand technology issues and their business implications.’  In their survey, McKinsey found that by having at least 1 person on the board knowledgeable about technology, 47% said it led to incorporation of ‘technology considerations into strategic discussions.’

And from “Delivery Large-Scale IT Projects on Time, on Budget and on Value,” the key points I’d like to extract are:

  • “On average, large IT projects run 45% over budget and 7% over time, while delivering 56% less value than predicted.”  This is simply dismal.  Imagine if we had these results from marketing or finance projects!
  • McKinsey identified four groups (quoted below) of issues that cause most project failures — and I believe nearly all of these are people related:
    1. Missing Focus — due to unclear objectives and lack of business focus
    2. Content Issues — shifting  requirements and technical complexity
    3. Skill Issues — unaligned team and lack of skills
    4. Execution Issues — unrealistic schedule and reactive planning
  • Good stakeholder involvement — which means having excellent interpersonal skills and establishing successful coalitions — ‘involves foresight when it comes to selecting vendors and negotiating contracts with them.’
  • Building effective teams is essential.  “Project teams need a common vision, shared team processes and a high-performance culture.  To build a solid team, members should have a common incentive structure…in contrast to individual work-stream goals.”  Doing this demands exquisite HR execution and a recognition that technology and the way people work are inextricably linked.

People indeed matter when evaluating, planning, implementing and examining technology projects.  With the obviously critical role IT projects and technology itself play in a corporation’s success, excellent outcomes can only be achieved by IT and business joining forces and working as an integrated team.

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IT Project Failure Rates: Facts and Reasons

The picture is indeed meant to startle — he doesn’t like the facts.  That is, failure rates on IT projects are unacceptably high, and the reason is primarily people-based.

Here are some facts:

  • According to an IBM study, only 40% of projects meet schedule, budget and quality goals.  Further, they found that the biggest barriers to success are people factors.
  • Geneca, a software development company, noted from its studies that ‘fuzzy business objectives, out-of-sync stakeholders and excessive rework mean that 75% of project participants lack confidence that their projects will succeed.’
  • As I’ve written before, McKinsey recently found that ‘while an increasing number of non-IT executives give IT a score of 61% for basic services like email and laptop support, only 26% rank IT high in the most vital area of proactively engaging with business leaders on new ideas or systems enhancements.’
  • The Portland Business Journal found similarly depressing statistics:  “Most analyses conclude that between 65 and 80% of IT projects fail to meet their objectives, and also run significantly late or cost far more than planned.”
  • One Canadian study actually stated: “Bad communications between parties are the cause of IT project failures in 57% of cases they studied.”
  • KPMG New Zealand found ‘…and incredible 70% of organizations have suffered at least one project failure in the prior 12 months and 50% of respondents indicated that their project failed to consistently achieve what they set out to achieve.’

Can you imagine hearing numbers like this for finance, HR, marketing or operations projects?  Despite the potential impact of IT projects on business competitiveness, their expense, their ‘opportunity’ cost and the sheer labor and time spent planning, these figures have not improved in well over a decade.  Why is that?

Some thoughts on where success lies:

First, team attributes.  Any large project involves many people.  Success or failure is generally based on the skills and effectiveness of the people involved, their ability to focus on the project, team dynamics and openness to change.  Failure to engage stakeholders is a classic mistake.

Second, team member focus.  IT projects often fail due to a lack of focus among team members.  Sometimes nobody on the team is exclusively focused on the project and everybody retains some level of responsibility for other projects, tasks, or jobs.  More frequently, IT resources are dedicated to the project, but the business users and sponsors try to fit project tasks around everyday jobs.  Under these circumstances, IT projects always go off track, normally very quickly, and normally necessitating massive rework, leading to budget and time overruns.

Third, dynamics between business and IT.  Active support, engagement and involvement of business users and executive sponsors is critical.  Only they know exactly what the requirements are, can tell whether the system is meeting those requirements, and can make key decisions. And only they can encourage adoption once the system is deployed.  Failure to establish a sponsor in the business is attached to most technology implementation failures.  (In fact, when change management was deemed effective, projects had a significantly better chance of meeting their objectives.)

 Fortunately, all is not lost.  Here are five steps to improving the ‘people-based’ factors affecting IT delivery:

  1. Solidify the technology/business relationship via governance
  2. Integrate technology intro strategic planning
  3. Set and share a simple, multi-year roadmap for overall business strategy
  4. Establish an open planning process
  5. Teach and promote communication and relationship skills

I believe if you view IT projects as not just ‘a technology problem’ and consider the people factors, your organization will increase its implementation success, create better relationships and maximize its ROI.

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