I did a scan around the web to figure out what many of the leading thinkers were saying about IT project failure and the root causes. Numbers varied between 20% and 80% of projects failing to deliver on their business case. The root cause analysis that follows from these failure numbers spends a lot of time looking at the IT project, but most forget to look at the causes of failure that are outside the project’s control.
In the diagram below, the central blue box represents causes of IT project failure that are inside the control of the IT team. As you can see, there are many more causes of IT project failure that are OUTSIDE that blue box than inside it. Yet, countless articles have been written on the factors INSIDE the box. I think it is time we take a slightly wider lens to the problem!
The factors outside the project are as important, or more important, than the ones inside the box. I have worked on many projects over the years, and if I look back at the ones that ended up cancelled or scrapped, the reasons were not ones in the blue box. They were usually ones from the top box: where the project should not have begun in the way that it did. Let’s look at these six factors:
- Lack of accountability for success – Sometimes, in an organization, an interesting situation will arise. I call this the “can’t lose” scenario. In this scenario, the CIO will suggest that the business can benefit by doing some particular initiative, and his or her people will set out to find a business sponsor for the initiative. In this case, the sponsor will reap the benefits of the initiative, not the CIO. (Let’s say that the CIO has suggested a Business Intelligence initiative, and signs up the Chief Marketing Officer to sponsor it). If the project succeeds, the sponsor wins. If the project fails, the CIO (not the sponsor) loses credibility. After all, it wasn’t the sponsor’s idea. The CIO dreamed it up, after all. In fact, the sponsor may not do any real “sponsoring.” He may sit in an occasional status meeting and check his e-mail while the program manager he assigned from his team answers questions… and keeps him protected from any blowback. The sponsor in this case is not accountable for success. No one is. The odds of this project succeeding are small. (Note: a good IT Governance system prevents this condition).
- Failure to get buy-in from above – Often, a senior executive will ask his operational leaders to suggest IT projects for the planning cycle. The executive (let’s say Tina Smith, Vice President of Sales) assumes that the leaders (William, Ashok, and Lee: all three are General Managers) will ask for projects that align to their individual strategic needs. One of those General Managers, William, decides to create an IT project to implement a SOA service bus. He wants the bus because he is investing in replacing an application and his IT team tells him that a bus is a good idea. After all, if everyone in the Sales group uses it, everyone will benefit. But William doesn’t get Tina Smith’s buy in. He implements his SOA service bus, but when subsequent IT funding requests come up to move other sales applications over to the bus, his peers Ashok and Lee are not interested. Their priorities don’t include moving to the bus. William bought a white elephant. Because he didn’t get Tina’s buy in, none of his peers will reap the benefits. Is the SOA bus a failure? Well… it’s not a success.
- Misaligned prioritization – Lee James, General Manager of Sales for the Western region of Contoso owns a sales strategy for the enterprise. The strategy is to make the sales force more productive by moving the company over to a new CRM system. The CRM system has out-of-the-box support for a long list of reports, but his team tells him that he shouldn’t use those. Instead, he should put in a Business Intelligence system in the cloud. Lee wants to trust his team to pick the right solution. They tell him that the cost of this system is $4 Million over two years. The company is moving to a new strategy that de-emphasizes the direct sales force. Instead, the company will be relying on social networking and direct eRetail to make sales. To make the new strategy work, there are eight projects totally $8 Million that need funding. There is a competition for dollars in the IT budget. Lee goes to bat for his $4 Million commitment. It’s important because “we are already here, so we have to complete the job.” This is an example of misaligned priority. The new BI project can be safely cancelled or scaled WAY back to support a strategy elsewhere, but that other strategy doesn’t belong to Lee. The one that he owns needs money and he’s going to keep fighting to fund it because his boss, Tina Smith, isn’t aware of the tradeoff. Lee fights, and Contoso loses. Which project will fail? Both of them.
- Slow decision making – This one is related to the other problems in that it is often, but not always, caused by a poor governance system or poor prioritization of the effort. In this scenario, the team implementing the project needs the sponsor to make a decision, often one that requires consultation with his or her peers or counterparts in another part of the company. The sponsor may be unwilling, unable, or incapable of having a difficult conversation. On the other hand, they may be indecisive. Regardless, this situation can cause serious delays in a project. For example, Ashwin’s application sends EDI-formatted messages to a health insurance provider. The provider had indicated that new fields are allowed in the messages that are very valuable to Ashwin’s line of business. However, he has to upgrade his EDI translation software to get the new fields. The EDI translation software is also used by the Finance group to send banking transactions. Ashwin knows that the finance group will get a benefit out of the upgrade and wants them to help cover the costs. This upgrade will add $25,000 to the cost of his project and he’s on a tight budget. The software team offers to write a small component that will insert the fields into the data stream, but its complicated and fragile. Ashwin cannot decide if he should ask the finance team for funding or if he should upgrade the software. The project team cannot proceed without a decision.
- Lack of authority to drive change – This one is quite common. Ashok reports to Tina Smith, VP of Sales for IBuySpy. He has told her that he wants to take the lead on one of her strategies
: to consolidate all of the eCommerce systems in the company to a single outsourced vendor. Tina things that this will reduce costs all around, and Ashok is happy to take on the challenge. His business analyst does a survey and it turns out that the services and support team offers customers the right to buy replacement parts online. In addition, the “outside services” team allows customers to buy a service contract on their own area of the website. The main sales site, of course, uses a high-volume low-cost vendor that Ashok is comfortable with. Ashok sets up meetings with the owners of the other applications, but they choose not to provide the needed transaction cost information or the cost estimates of changing their internal systems. His data is light but he strongly suspects that there is a good business case for switching. Unfortunately, he doesn’t have the data to prove it. Without data, the Tina won’t take the case to the CEO to require the other teams to jump onboard. The strategy fails. Neither Ashok, nor his manager Tina, have the authority to require their peers to adopt a lower cost system.
- Lack of influence to rally peers – In many organizations, the prevailing attitude is that the boundary between “centralized” services and “federated” services is intentionally fuzzy. In these companies, there is no policy that requires a function to be centralized vs. federated. For example, if a company has ten divisions, three may have their own financial processes, while the other seven share a common finance unit. The decision to use the central finance unit, or to own a federated unit, can be made and unmade depending on who the leaders of the business are. (Note: leaders change, and with them, these decisions change as well). This kind of policy is good for flexibility, but creates both inefficiencies and often, confusion. This is simply a tradeoff in the design of organizations. It is neither right nor wrong. In this environment, any business can create a “centralized” function by convincing more than one business leader to come together to create a shared resource. The flaw comes when a group wants to create a “centralized” (or simply “shared”) function, but they lack the influence needed to get multiple businesses to join the initiative. Difficult questions of shared funding can be demotivating, and the political need to create “alliances” can be difficult for junior executives that, in many ways, are competing with one another for the next rung on the career ladder.
Each of these conditions has the potential to kill an IT project. I would suggest that MANY IF NOT MOST of the failures of IT projects can be traced to one or more of these conditions, but these conditions rarely get counted in the statistics for “Causes of IT Project Failure.” Why? Because, in most cases, projects that suffer from these conditions are either never funded, or are reworked so that the political problem is simply avoided. The project business case does not reflect the problem, so the criteria for failure (doesn’t meet the business case) is never met. Efforts are made to avoid (but not address) the problem before the business case is written!
This is the world of the Enterprise Architect. These are the kinds of “failure” that fill the eyes and ears of an Enterprise Architect. If an EA focuses on only these six causes, he or she will deliver real, tangible, and unique value to their enterprise without ever overlapping the roles and responsibilities of an IT architect, business analyst, or technologist.