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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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