IT projects are complex, prone to delay and often fail to deliver the expected benefits, or any at all. Whilst each project is different, the reasons for failure are often similar. Sometimes the fault lies with the supplier, sometimes with the customer, frequently both.
In this article, we look at common failings on the part of customers and steps which they can take to avoid them In the next we consider failings more commonly initiated by suppliers.
- The customer does not communicate what it wants
On one level, the customer may know exactly what it wants: the best IT system available for the money it is prepared to spend. However, customers often commission IT systems without a full understanding of the benefits to be delivered, how long it will take for those benefits to be realised, and how success will be measured. These problems are exacerbated by the fact that the RFP will often be drafted in very general terms and the requirements of the system are not fully articulated until after the supplier has been selected.
Brief your supplier carefully in relation to the outcomes you expect, the constraints and interfaces, the features and uses. Test your supplier to ensure that it can articulate your understanding back to you. Minimise the scope for doubt: ensure the requirements have contractual effect.
- Stakeholders differ
There is often a level of detachment in the customer’s business between those who commission and authorise payment for a new IT system, those who appoint the supplier and those who will have to use the new system when it is installed. Management want to deliver results and drive the business forward, but other stakeholders may differ in their view of priorities. Often the users have little or no involvement until the system is installed or being tested. This can drive disengagement and lead to a lack of effective co-operation.
Balance the composition of your procurement team carefully, involving those who will use the system when it is installed. Allow all involved enough time to do this work free of their other duties. Appoint an experienced leader to run the process for you, hiring in skill and experience if necessary. You will get there faster and more economically that way. Aborted procurement cycles are common where hope exceeds skill and experience.
- The customer appoints the wrong supplier
It may seem an easy option to hire a big name or a familiar software house to deliver a new IT system. These suppliers may be competent in their field, perfect where that reflects your need but will not always be the best option. The low-bidding vendor may be attractive but is this because it has a distinct advantage that gives it the ability to deliver value at lower cost or has it set a course to improve its margin by changes to the system during the delivery phase? If you have bought cheaply, expect to invest heavily in contract management to keep the vendor honest and delivering in accordance with its contractual obligations.
Take care in the selection of your supplier. Follow up references. Ensure that your supplier can demonstrate sufficient competence in all the critical aspects of delivery. Don’t be afraid of pressing your supplier for answers. We have seen significant time and cost wasted in development write-off which could have been avoided if procurement and planning had been more carefully conducted.
- The change is too great
A new IT project is often part of a wider change management programme, perhaps involving changes to business models, the roles and responsibilities of employees and the integration of a new IT system with multiple legacy systems. Such major change affecting many aspects of a business is difficult to mobilise and sustain, requires significant skill (which is expensive to hire) and frequently gives rise to unwelcome surprises. In extremis, failed change can sink a company (and public-sector careers). Several researchers have found a strong correlation between programme size and the probability of failure. However, avoiding change can bring its own problems and may result in a business losing market share to competitors. Furthermore, a crisis may arise, forcing action, often at greater expense and disruption than would be the case if a change management programme had been carefully planned. One of our clients faced huge change under regulatory and investor pressure that was beyond the organisation’s ability to manage, even with external help.
The ideal of transforming business operations in manageable chunks is greatly to be preferred, but not always available. Plan change carefully, with expert advice if appropriate, and ensure those in charge of business transformation receive the necessary level of executive support. Always keep in mind the objectives of the change programme and ensure it meets your long-term business requirements.
- Failure to provide resources
One of the biggest problems encountered in project development is the failure by the customer to commit the necessary resources. Customers must appreciate that they cannot simply appoint a supplier to deliver a new IT system without providing the access to key individuals and the information required to achieve a successful integration. Suppliers know this well and qualify the quality and sufficiency of the staff they assign to a project by reference to the sponsor’s commitment. They will also place dependencies on the customer to contribute to governance and defined milestones such as design approval and the availability of staff for deployment. Customer resource may also influence the risk premium charged. A well-resourced customer is more likely to be supportive, decisive, and cheaper to serve than the under-resourced.
Be prepared to commit the resources necessary to enable the supplier to deliver the system you have commissioned. If the project is large in scale, reassign key individuals to the project or ensure that they are able to commit the necessary time to the project without compromising their other responsibilities. Allow the supplier access to data and legacy systems. Cooperation in all aspects of delivery will lead to a smoother project, minimising the risk of friction between the parties and increasing the prospect of successful delivery.
- Poor project governance
Although a customer may legitimately consider that control of a project primarily lies with the supplier, a key responsibility of the customer’s project or programme manager will be to work alongside the supplier’s project manager to ensure the project is effectively governed. This will hold all parties, including customer staff, to account for delivery of their obligations and the promised results. Effective scrutiny is strongly associated with project success. This is reflected in tracking delivery to plan; the continual assessment and management of risk; the management of change; the maintenance of interest and commitment by the customer sponsors; and effective decision-making and direction.
Two essential disciplines here can contribute to good outcomes: effective use of business cases and architectural standardisation. Business Case review promotes consideration of the wider strategic, operational and tactical benefits in the most cost-effective way. Architectural standardisation helps to ensure that steps taken for one project can effectively be included within the enterprise, using a standard approach and avoiding the pitfalls of isolation. Where benefits are tracked and staff held accountable for their capture it is far more likely that the system will be satisfactorily delivered. We are continually surprised by the high incidence of issues with accountability, but not by the corrosive effect that this has on the performance of projects and services. This is neither quick nor easy to fix, but leadership by example is a good way to start.
- The customer changes its mind
A new IT system may take many months to deliver and requires not just the commitment of customer resources but the patience of customer management. This can be particularly strained if there is a change in the composition of the management team or the business approach, or if changes in market conditions or other external factors erode the necessity for or perceived benefits of the new system. The rate of change of technology is another factor. A system which is best of breed when commissioned may be overtaken by competitors by the time it is delivered and well behind the market several months later.
Customers must maintain continuing consideration of the business case for the system. If the business case is being realised as promised, maintain commitment to the delivery and resist the temptation to divert budget and able staff to other initiatives. Use good governance to ensure that the project does not stray too far from budget and the projected delivery timeline. If the system no longer meets the business case the customer may have to make the difficult decision of cancelling the project and possibly commissioning a different system, often at considerable expense.
Experience and research suggest that whilst there are few well established frameworks for success, the variety of creative approaches to failure are many. At the root of success are:
- A good, realistic agreement that cogently captures the intent of the parties
- Competent delivery to plan
- The provision of sufficient and skilled resource
- Effective control and decision-making
- The considered control of change
All of which are easier said than done. Without these, the project may be doomed from the outset.
This article was co-authored by Lee Gluyas, a partner at Nabarro LLP, an international law firm with headquarters in London. Lee specialises in the resolution of disputes, particularly those arising from outsourcing contracts. He spends much of his time advising clients on the management of distressed projects, helping to get a failing project back on track if possible but ensuring his clients are in a strong position if the project fails and legal proceedings are commenced.
This article was first published in Outsource Magazine and is reproduced with permission.