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.
1. The customer does not communicate what it wants
On one level, the customer normally knows 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 they expect. They may not know the time likely to realise benefits, or how they are to measure success. Many customers draft their RFP in very general terms. They may not fully articulate their requirements of the system until after they have selected their supplier.
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.
2. Stakeholders differ
Within a customer’s business, there is often a level of detachment between people exercising key roles. Commissioners may not also authorise payment for a new IT system. The people who appoint the supplier may not be those who will 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 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. 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.
3. The customer appoints the wrong supplier
It may seem an easy option to hire a big name to deliver a new IT system. These suppliers may be competent in their field. This is perfect where that reflects your need but will not always be the best option. The low-bidding vendor may be attractive. 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 receive 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 written-off development. This can be avoided by conducting procurement and planning carefully.
4. The change is too great
A new IT project is often part of a wider change management programme, perhaps involving changes to business models. Such programmes change roles and responsibilities of employees. They also normally change the integration of the 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. Failing programmes can lead to crisis, forcing action. This often comes at greater expense and disruption than would be the case if a the programme had been delivered calmly. 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. Ensure those in charge of business transformation receive the necessary executive support. Always keep in mind the objectives of the change programme and ensure it meets your long-term business requirements.
5. 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 support delivery by providing access to key individuals and the information required to achieve a successful integration. Suppliers know this well and assign their own staff to a project by reference to the sponsor’s commitment. They also place dependencies on the customer to contribute to governance and defined milestones. Typical dependencies include 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.
Commit the resources necessary to support the supplier in delivering the system. If the project is large in scale, assign key individuals to the project. 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. This minimises the risk of friction between the parties and increases the probability of delivery being successful.
6. Poor project governance
Customers legitimately consider that control of a project primarily lies with the supplier. However, the customer’s project manager will be responsible for working 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. They should track delivery to the plan. Risk must be continually assessed and managed. They should manage changes to the programme. Their actions will influence sponsors’ interest and commitment and the effectiveness of 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. Standardise your architecture to ensure that the new project fits effectively within the enterprise. Where managers track benefits and hold staff accountable for their capture, it is far more likely that the system will delver the outcomes expected. 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.
7. 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. Changes in in the composition of the management team or the business approach cause particular strains. These can arise from changes in market conditions or other external factors, eroding the necessity for or perceived benefits of the new system. 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.
A Route to Success
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.
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The Next Article in the series addresses the Supplier’s Fault
This article was co-authored by Lee Gluyas, a partner at CMS Cameron McKenna Nabarro Olswang 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.
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A version of this article was first published in Outsource Magazine and is reproduced with permission.
