3. IT Project Failures
A number of studies and surveys have been conducted in recent years that have highlighted problems and failures related to IT projects. A summary of the following surveys can be found at the IT Cortex website.
The Chaos Report (1995)
The first survey by the Standish Group is perhaps the most famous study on this topic. The Standish Group surveyed IT executives in large, medium and small organizations across major industry segments. The 365 respondents represented 8,380 applications; focus groups meetings and personal interviews were also conducted. The results: 31.1 % of projects will be cancelled before completion and 52.7% will cost over 189% of original estimates. Based on the research, the Standish Group estimated that in 1995 alone, American businesses and government agencies would spend $81 billion for cancelled software projects and that more than 80,000 software projects would be cancelled. In large companies, only 9% of projects were expected to come in on time and on budget.
The OASIG Study (1995)
A study in the UK by a special interest group associated with organizational aspects of IT. Information was collected from 45 IT experts across the UK with an average of 20 years experience, drawing conclusions from around 14,000 user organizations. The results: IT project success rate was around 20-30% at best, with 70% of IT projects failing is some respect.
The KPMG Canada Survey (1997)
A survey on IT project management issues sent to 1,450 of Canada's leading public and private sector organizations. 176 completed questionnaires were analyzed. The results: Over 61% of projects were deemed to have failed; 75% were 30% over schedule or more; over 50% had exceeded their budgets by significant amounts.
The Conference Board Survey (2001)
A survey of executives at 177 companies related to ERP (Enterprise Resource Planning) implementations. The results: 40% of the projects failed to achieve their business results within one year of going live; the companies that did achieve benefits said achievement took six months longer than expected. Implementation and operational support costs were significantly underestimated.
The Robbins-Gioia Survey (2001)
A study conducted by the Alexandria, Virginia based consultancy related to the implementation of ERP packages - 232 respondents from communications, financial services, government, healthcare, IT and utilities. The results: 51% viewed their ERP implementations as unsuccessful; 46 % did not feel the organization understood how to use the system to improve their business.
There have been many surveys since these, and many articles on IT project failures can be found on the Internet. In particular, the failure of IT projects in the governmental sector has been readily apparent, in the USA and in Europe. A good discussion can be found by Michael Krigsman in the UK, who wrote on May 30, 2008, "Failed government IT projects occur with alarming frequency. In some respects, these failures share much in common with botched private sector initiatives. For example, failures in both environments are primarily a function of poor management rather than bad technology. Still, there are important differences between government and business projects, particularly in areas related to procurement, needs definition, project oversight, and accountability."
Krigsman goes on to quote Philip Virgo, Secretary General of the UK political advisory body EURIM, who has described the dynamics that cause government projects to tank. Here are Philip's six reasons that government IT projects fail:
- Analysis of business needs, missing or wrong
- Needs change before implementation
- Over-ambition, about what is achievable in practice, given the people, time and budgets available ...
- Delays, particularly in agreeing priorities between conflicting objectives, leading to delay in planning and procurement ...
- Lack of top customer management involvement, and lack of high-level skills, training or experience in planning, procurement or implementation.
- Supplier project or team management, usually because the "B" team is trying to salvage an already doomed system, after the "A" team has moved on to the next bid.
Government projects have so many problems, according to Virgo, because "accountability structures" separate project requirements and goals from the real needs of end-users. "Shifting political priorities, with neither consultation with the users nor consideration of the practicality of the consequent 'ministerial' demands for change" cause projects to flame out. If the root of government IT failure lies deep in the structure and relationship between political masters and humble IT servants, then spectacular public sector meltdowns are here to stay.
Results of another more recent survey by CIO.com on IT project failures can be found by Matt Asay on cnet.com. Clearly there are many reasons for project failures, both within the IT sectors and in other industries. But IT project failures have been numerous and highly visible in recent years. Such failures have also been leading to more interest and investment in professional project management, and increased demand for more qualified and certified project managers.
This is not to say that there have not been many successful projects, some of which have been famous and spectacular. But in my experience, successful projects often lead to reduced budgets for PM, whereas project failures generally lead to increased focus on PM, with increased budgets and staffing for more and better PM.