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4/4/2013
02:43 PM
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Why Tech Projects Fail: 5 Unspoken Reasons

Today's IT groups make too many ROI guesstimates and have too little accountability, says this financial industry IT exec, in his debut column for InformationWeek.

Depending on which consultancy you ask and what they're ultimately trying to sell you, the failure rate for technology projects is anywhere from 37% to 75%. I especially like the 37% -- not 35, but 37 -- because those extra 2 percentage points give the kind of false precision that suggests authenticity.

If managing technology pays your mortgage, you usually explain away those failures by pointing to your gray world: gray requirements, gray resources, gray planning, gray risks. The only vibrant color in your life is the brilliant hue of overly optimistic project scheduling.

But that's not the whole story. Here are five unspoken reasons IT projects fail as often as they do, drawn from my two decades as an IT manager and executive in the financial services industry.

1. Technology ROI numbers are mostly fiction. The most complex variable in the ROI equation -- one that's usually ignored -- is the cost of the business re-architecture required to consume a proposed technology. If you take away nothing else from this article, know that technology demands business transformation, and that's usually the largest hidden cost.

The rule of thumb for calculating the risk of rolling out new technology is this: the higher the buy-or-build price, the larger and more expensive the required redesign of your business processes.

[ To launch any successful IT program, you must dispense with distraction. Read more at 8 Reasons Enterprise Architecture Programs Fail. ]

Rethinking your processes is just one disruptive element. Think about all the non-tool-based training your company needs to do before introducing a new tool, and think about all the cultural changes it needs to make to pave the way for new technology adoption.

As soon as you bring culture into the equation, determining the potential cost of an IT engagement becomes exponentially more difficult. ROI analysis will necessarily enter gray country, leaving the comforts of hard science and treading into the imprecision of social science.

It's not impossible to get the calculation right (or close), but here's the kicker: No matter how solid or technically sophisticated an ROI analysis may be…

2. ROI rarely drives the technology investment decision. In most companies, determining the potential costs and benefits of a tech investment is neither art nor science. Rather, it's an elaborate and often dishonest marketing exercise (upward and outward-facing) aimed at persuading senior stakeholders that one HIPPO should win out.

Having worked for both tiny startups and massive multinationals, I've learned that the larger the company, the greater the chance that what drives tech investments isn't what's best for the business, but what's best for the decision-maker's career. And in large companies, those two factors rarely align.

At my previous employer, a large financial institution that has gone belly up, I attended a great many senior management off-sites. One particular exchange with a senior exec has haunted me for more than a decade. During a breakout session, a midlevel manager asked what he should do if he were competing with his internal peers for funding when he knew that their functions and ideas were more important to the bank. The answer from the senior exec: Treat your role as the most important and do everything you can to win that funding fight. In other words, putting yourself first is in the best interests of the company.

The unintended consequence of this kind of thinking was the financial community's spectacular collapse. The unintended consequence in IT -- and this isn't unique to my former employer -- is that project funding more often goes to mildly technical marketers and shameless salespeople, not to hardcore engineers and scientists who let the data drive.

Rare is the executive who puts the company's interests before his or her own (financial stability, career progression, personal brand building). And that kind of behavior isn't exclusive to executives; it's pervasive from the boardroom to the mailroom.

That's not the only unlearned lesson of the banking crisis of 2008….

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3. There's rarely any long-term accountability in technology. Multi-year projects are repeatedly green-lit with an implicit understanding that most of the current decision-makers will have moved on or up by the time the project is set to deliver.

The handover of the project's reins to the next-level-downs actually helps the brand of the people moving up. Project failure can conveniently get recast as a failure of execution by the original decision-makers, most of whom are now more senior and no longer directly responsible. If only they hadn't answered management's higher calling. This phenomenon, the dynamic behind "failing up," is endemic to all corporate life, not just technology.

It sounds insidious (and it is), but what's driving the cycle is pretty human. Most people want to see career progression with or without the requisite blood, sweat and tears. In technology, where product lifecycles are usually three to five years max, staying in the same job for more than two or three years signals a lack of drive, ambition, skills.

The message: Change jobs or be considered irrelevant. Upgrade or be upgraded. So there's a structural incentive for career mobility. Long-term projects are consequently damned if you move and damned if you don't.

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PatMorrell
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PatMorrell,
User Rank: Apprentice
4/8/2013 | 2:55:42 PM
re: Why Tech Projects Fail: 5 Unspoken Reasons
Overall, I agree with Coverlet Meshing's conclusions that misguided ROI expectations/calculations, self-serving accountability issues, and un-Agile projects are precursors to tech project failure. I also agree that monolith off-the-shelf tech companies have the potential to inhibit project success (and, long-term, stifle technology decision-making); on addendum I would suggest, however, is that not all outside partners are proverbial loaded guns. Agile, custom business technology shops can usher larger organizations through the murky innovation waters and deliver progressive software applications (sans licensing fees, etc.) that mirror existing workflows/culture, and solves business problems. Quick aside: this article is guided by the presupposition that all enterprise tech projects originate in, and are led by, IT. Increasingly, I've seen this trend change; more and more, "intrapreneurs" in marketing, ops, and other functions are taking the reins on new tech projects.
MyW0r1d
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MyW0r1d,
User Rank: Strategist
4/8/2013 | 3:28:31 PM
re: Why Tech Projects Fail: 5 Unspoken Reasons
I believe I have seen all five of these at some point in my career and agree they are top contributors to project failure. The cost consciousness and reductions in IT over the past few years have left some internal IT departments with overtasked skeleton crews and greater dependence on outsourcing. Number five however does not have to be the proverbial loaded gun. Two actions I think can mitigate the effects indicated in the article and reduce this risk. First, evaluate your outsourcing staff members as if you were hiring them (get their resumes if necessary). Depending on the outsourcer they can provide microspecialists which do nothing other than installing and configuring the HW/SW for your project. This experience can greatly reduce delays from testing/development to operations. Second, identify one FTE to shadow the contractor. Your internal staff can then perform the "lights on" maintenance and operation of the system once the keys are past. Naturally it all depends on the specific project, but these two actions have helped.
spintreebob
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spintreebob,
User Rank: Apprentice
4/8/2013 | 5:09:10 PM
re: Why Tech Projects Fail: 5 Unspoken Reasons
Agreed on the five listed. Expanding on them: Sales people are under pressure to replace the existing with the new, regardless of whether the existing has a problem or not and regardless of whether the new is actually better, or just new. So sales people sell the sizzle and not the features or benefits...and certainly not the solutions their bullets claim. They tell the buyers "Buy this new technology and all your problems will be solved." The buyer is looking for a scapegoat. It's politically safer to blame the existing technology than blame the application and database designs and the coding and testing of the people you still have to work with. Whether a code generator or a performance monitor or project management tool, the manager who bought the sales pitch will ask the workers "Well did the tool fix the problem?" as if the code generator could fix the problem of a poorly designed application, or the performance monitor actually fixed the performance problem.
naperlou
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naperlou,
User Rank: Apprentice
4/8/2013 | 9:24:21 PM
re: Why Tech Projects Fail: 5 Unspoken Reasons
What is going on here????? These numbers have not moved for years and years!!!! Wasn't CASE suppossed to help? Waht about SOA/BPM?? What about agile? Can it just be a matter of organizational issues? I don't think so. Frankly the reason I am reacting so excitedly is that I have worked for the companies that sell a lot of those technologies. If they are really utilized as intended they would change the picture significantly (well, except agile). What I see as a real problem in the corporate software development world is a combination of the professional and personel issues mentioned with a lack of proper education or professional certification.

We often have people with computer science degrees or business degrees doing this work. What we really need is more people with software engineering degrees and certifications. I personally have a BS in Computer Science, but I have a lot of experience with software engineering, having gotten involved before software engineering degrees were offered. I am also a fan of certifications like the IEEE CSDP. I am also a member of the IEEE.

I also get upset about this issue because I worked at a few very advanced software development shops. We did not have these problems. We tracked software development very tightly and were able to estimate new projects very accurately. We were also able to manage them to completion through some techniques that I see filtering into approaches such as the PMP process just now. I was using them over 20 years ago.
Andrew Hornback
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Andrew Hornback,
User Rank: Apprentice
4/10/2013 | 3:09:08 AM
re: Why Tech Projects Fail: 5 Unspoken Reasons
I have to very whole-heartedly agree with point 3. It's not necessarily about multi-year projects, but about finding the proper solution when a need is identified.

For example, one organization that I'm quite well acquainted with has multiple "Enterprise Knowledge Management Platforms". Okay, so what's the problem with that? Cohesiveness, or lack thereof. Let's start from the beginning - when a new user gets on-boarded, they're bombarded with a list of URLs and sets of credentials for all of these platforms. As they progress, they start using the platforms and keep asking questions about where to find X, Y and Z. Meanwhile, X, Y and Z are on different platforms, but the user has to gather all of the information together, synthesize and report - thereby creating more content and having to choose which system to use to store it, since it has to be somewhere that everyone can get to. Now, wasn't the whole idea behind using an Enterprise Knowledge Management Platform to have a SINGLE place in the enterprise where all users can find and store all of the information that they work with? Instead, you have users who have to search through multiple, disparate knowledge sources - even ones that are considered depricated, legacy, "soon to be retired", etc. Meanwhile, all of them keep getting used and worker productivity drops like a stone.

What it boils down to, in this case, why worry about choosing a system to implement if you know that you're not going to be directly responsible for that choice by the time the organization realizes it wasn't the right one? If you're not going to be held accountable for a decision in three years, should you really be empowered to make that decision?

Andrew Hornback
InformationWeek Contributor
MedicalQuack
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MedicalQuack,
User Rank: Apprentice
4/10/2013 | 5:37:17 AM
re: Why Tech Projects Fail: 5 Unspoken Reasons
Nice article and just goes to show you can do anything with software:) I borrowed that from the guy who wrote the sub prime software that all the banks used and modeled for their trillions in profit. If you have never seen the documentary Quants, the Alchemists of Wall Street, watch it. Mike Osinski is the one why made the comment and he's in the movie and makes a good point on how some of what we see is vaporware and twisted code.

Right now we have a data mining epidemic going on to where they don't know when to stop and are in search of some non linear model and algorithms that will "save the day"...Models that lie in other words...I talk about it in healthcare and I call it Algo Duping.

http://ducknetweb.blogspot.hk/...

Here's a bunch of videos and the one above included on how Algo Duping works..I'm the curator and these are folks smarter than me. We are under the Attack of the Killer Algorithms...

http://www.ducknet.net/attack-...

Coverlet
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Coverlet,
User Rank: Strategist
4/10/2013 | 1:35:11 PM
re: Why Tech Projects Fail: 5 Unspoken Reasons
Pat - Great point on intrapeneurs. Very interesting trend and ultimately, an indictment that IT lacks the credibility with their stakeholders when it comes to delivering adjacent and edge technologies quickly. Look for references in future columns to "elves."
ChrisMurphy
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ChrisMurphy,
User Rank: Author
4/10/2013 | 3:13:32 PM
re: Why Tech Projects Fail: 5 Unspoken Reasons
I was on a panel recently discussing internal social networking projects, and the topic turned to ROI. I argued a lot of these have to be a leap of faith -- that you just aren't going to get a hard ROI on something as fuzzy as getting people to share ideas and collaborate better. But there was a sense that ROI still must be calculated at most companies.
Coverlet
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Coverlet,
User Rank: Strategist
4/10/2013 | 4:19:49 PM
re: Why Tech Projects Fail: 5 Unspoken Reasons
The larger the company the more likely that ROI will be demanded. Scale is the real problem. A company is itself a social network and once it grows past a certain size, it can't trust that each node will act responsibly. Demanding ROI is the trust safety net. And few question whether there are huge holes in it.

It's funny how easily we can humanize bureaucracy or process heaviness by just framing it as a trust-building exercise.
Coverlet
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Coverlet,
User Rank: Strategist
4/10/2013 | 4:32:15 PM
re: Why Tech Projects Fail: 5 Unspoken Reasons
Oddly enough, I mention quants in the second part of this piece. I'll be interested in your feedback when IW publishes it.
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