The real reason 70% of IT projects fail, and what you can do about it

Most businesses make poor decisions when it comes to IT spending. This is the first article in a series exploring common mistakes that lead to wasteful spending and missed opportunities. This first article focuses on the many IT projects completed each year that are doomed to fail from the outset. The second article asks have you lost control of IT? And the third and final article looks at how trying to save money on IT resources can end up costing businesses much more in the long run.

why IT project fails

 

Why IT projects fail has been discussed many times and this article looks to provide a fresh perspective on the root causes versus the symptoms that causes projects to flounder.  Most businesses make poor decisions when it comes to IT spending. This is the first article in a series exploring common mistakes that lead to wasteful spending and missed opportunities. This first article focuses on the many IT projects completed each year that are doomed to fail from the outset.

IT projects often deliver poor ROI. A 2020 BCG report found that only 30% of technology transformation projects met or exceeded their target value and resulted in sustainable change. That’s because most IT projects tend to be assessed on whether they deliver on time and on budget, but these aren’t the most important metrics. The success of IT projects should be based on the benefits they bring to the business.

The problem is that most IT projects focus on delivering the technology rather than the business changes needed to realize the benefits. And then they leave the project in the hands of IT to deliver, which compounds the mistake.

 

 

Making your IT projects about business changes, rather than technology

Making your IT projects
Picture the scene. The VP of Sales says that they need Salesforce because their current CRM doesn’t do what their team needs. It is old-fashioned, doesn’t have AI, doesn’t do email marketing, and doesn’t integrate with the other systems. This leads to inefficiencies, missed sales opportunities and poor customer experience. In short, they would realize efficiencies and sales growth if they had Salesforce. The CEO agrees, the budget is made available, and the project gets passed to IT for implementation.

Fast forward 12 months. Salesforce is now deployed, but it’s not been without problems. It’s been painful getting customer contacts and opportunities migrated over. Some of the internal users were quite unhappy about making the change, and there are still some things that aren’t working properly. But basically, the team is up and running on the new system. Should we expect to see those efficiencies and sales growth now? Not necessarily. And even if we do, how do we know that it’s because of the new technology?

The case for a business-first approach

The case for a business-first approach

It’s common for people to throw technology at a problem. In this case, it seemed perfectly logical that the deficiencies in the old CRM were causing inefficiencies and stunting sales, and that upgrading to a better CRM would help. But unless you specifically identify the process and behaviour changes that will directly lead to the benefits (the efficiencies and sales growth) you’re hoping for, then they’re unlikely to materialize organically.

Research on this problem was done in 2007 by Peppard and Ward, ‘Managing the Realization of Business Benefits from IT Investments’, which included an easy common-sense solution that’s not hard to implement. But I haven’t seen much evidence of this being done in the businesses we work with.

When faced with a problem you want to solve, the key is to work backward from your desired objectives and benefits, through the business changes that will drive those benefits, and then to the IT changes that enable those business changes. And you can achieve this in just a few hours by creating a Business Dependency Network (BDN) with your team.

Here’s an example of a BDN from that Peppard and Ward research paper linked above. To create a BDN, start on the right-hand side by defining the Investment Objectives and work towards the left. Eventually, you end up with the IT Enablers, which you can identify with the help of your IT team, who will then use them to identify the right technical solution.

Business dependent network helping to reduce the likelihood of why it projects fail

By doing a BDN, you might find that the IT enablers are not what you thought they were. You may not need that new CRM after all. You may need a different system or none at all. It might just be a case of reshaping your processes to achieve the benefits you’re looking for.

The fact that the BDN identifies the business changes needed to realize the benefits is arguably its biggest value. It provides real insight into the mechanics of your business unit. These changes can now be codified in processes and policies, and staff trained, ready for the rollout of the new technology.

The final step is then to create metrics to specifically measure those benefits, both before and after implementation, so you can judge how successful the project has been. And the key here is to continue measuring long after implementation so that you can keep tweaking the solution to extract the most benefits possible, and get an early warning alarm for when the wheels are coming off again.

 

Don’t make your IT team solely accountable for IT projects

 Don’t make your IT team solely accountable for IT projects
It should be clear by now that the success of an IT project comes from the business changes it enables, rather than the technology itself. So, it makes sense that the IT team, while having responsibility for the technical aspects of the project, cannot be held accountable for seeing that those business changes occur. This accountability must reside within the business unit itself.

What should happen is that the business unit retains accountability for the entire project, from start to finish. They should be in lock-step with the IT team throughout, creating the BDN, defining the new processes, signing off on the design, providing feedback and course corrections throughout, and taking ownership to ensure that users are engaged, trained, and fully on board with the changes. Depending on the size of the project, it could be a very serious commitment on the part of the business unit.

Unfortunately, what usually happens is that the business unit fails to commit the time and resources needed, leaving the IT team to deliver the project with minimal input from the business. This lack of input means the technology doesn’t do what it’s supposed to do, the required business changes are not properly defined and implemented (users are trained on what buttons to press but not how their work processes need to alter), so the benefits are not realized. The net result is that the project doesn’t have the positive impact that was hoped for, and future IT investments are harder to approve because of the lack of value they provide.

Why does the business unit fail to provide the resources needed? It’s because they don’t have the capacity. It’s likely because the business unit was struggling under the weight of their current processes that the project was approved in the first place. So how can they commit the time needed to the project? The answer is by adding the cost of backfilling the gaps created in the business unit to the IT project budget. So for every IT project you approve, there is a resourcing plan attached that ensures it will be fully supported without hobbling the business unit’s ability to deliver its regular operations.

Thank you!

Thank you for reading this article. We hope you found it useful. Our series on IT spending will continue with a look at the downside impact of easily-accessible software services and how it can cause an existential threat to your business.

Mindfield Consulting has over two decades of experience delivering technology that meets every mission. Our client’s win when they are empowered with the right technology and the right people for over 22 years across Canada and US. From vision to execution Mindfield provides services like Virtual CIO Services , Virtual IT Specialists, Fractional CIO Services,IT Audit, Office365 ServicesSharePoint Intranet Consulting, and SharePoint Migration Service.

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