IT Failure and Waste

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This presentation describes causes of failed IT projects, provides examples, and discusses solutions. Presented 10/5/09 at the Center for Global Business Law & Ethics, at Suffolk University's Sawyer …

This presentation describes causes of failed IT projects, provides examples, and discusses solutions. Presented 10/5/09 at the Center for Global Business Law & Ethics, at Suffolk University's Sawyer Business School (Professor Lydia Segal, Program Coordinator).

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  • 1. Michael Krigsman Asuret, Inc. IT waste: 617-905-5950 mkrigsman@asuret.com A world-class problem © Copyright 2009 Asuret Inc. All rights reserved.
  • 2. Failure is common: 30-70% of projects are late, over-budget, or don’t meet plan. © Copyright 2009 Asuret Inc. All rights reserved.
  • 3. Total failure worldwide: maybe $6 trillion (SWAG*) *silly wild-ass guess http://blogs.zdnet.com/projectfailures/?p=6142 © Copyright 2009 Asuret Inc. All rights reserved.
  • 4. Many of us ignore the warning signs © Copyright 2009 Asuret Inc. All rights reserved.
  • 5. So What? “That’s the IT Department’s problem, not mine.” © Copyright 2009 Asuret Inc. All rights reserved.
  • 6. Nightmare S c e na rio Levis can’t fill orders for one week = 98% decline in quarterly profits http://blogs.zdnet.com/projectfailures/?p=917 http://blogs.zdnet.com/projectfailures/?p=935 © Copyright 2009 Asuret Inc. All rights reserved. Image © LS&CO
  • 7. Understanding failure © Copyright 2009 Asuret Inc. All rights reserved.
  • 8. Business vulnerabilities, not technology, cause the problems Project Management Executive Change Sponsorship Management Stakeholder Third-Party Involvement Relationships IT Business Case Project Resource Availability Success © Copyright 2009 Asuret Inc. All rights reserved.
  • 9. Managing pain was part of the plan. Adrian Sannier University Technology Officer, ASU (Wall Street Journal, 9/25/07) © Copyright 2009 Asuret Inc. All rights reserved.
  • 10. Guns at Arizona State University  Expected: $70M; Plan: $30M  Typical schedule: 4 yrs; Plan: 1.5 years  Software vendor: Oracle  Project goal: Replace payroll system  Failure: Incorrect paychecks cause severe morale problems, including need for armed guards on payday  Causes:  Complexity of university payroll  Primary project strategy: maintain schedule at all cost  Accepting high error rate, with plan to fix over time http://blogs.zdnet.com/projectfailures/?p=412 http://blogs.zdnet.com/projectfailures/?p=418 © Copyright 2009 Asuret Inc. All rights reserved.
  • 11. American LaFrance: Custom emergency equipment © Copyright 2009 Asuret Inc. All rights reserved.
  • 12. ALF blames IBM for bankruptcy  Cost: Unknown, but IBM listed as $5.5M creditor  Goal: Outsource ERP to IBM (financials, inventory, etc.)  Background: ALF spun out of Freightliner  Failure: Software problems interfere with inventory tracking and other issues, causing late deliveries, customer service issues, and quality control  Result: Bankruptcy filing  Causes:  ALF distracted by deteriorating relationship with Freightliner, problems with constructing new facility, and economic downturn  Poor project planning and oversight by IBM http://blogs.zdnet.com/projectfailures/?p=583 © Copyright 2009 Asuret Inc. All rights reserved.
  • 13. [W]hen you’re marching through hell, just keep marching. Charles Burbridge LAUSD’s CFO (LA Times, 3/19/07) © Copyright 2009 Asuret Inc. All rights reserved.
  • 14. LAUSD payroll broken: teachers suffer  Budget: $95M; Expected: $135M  System integrator: Deloitte Consulting  Software vendor: SAP  Goal: Replace payroll system  Failure: Teachers not paid  Causes:  University payroll is inherently complex  Roll out and testing were likely flawed (Union: system not run in parallel)  Complicated work rules  Deloitte did not press LAUSD for complete information  SAP did not want to interfere with Deloitte’s account http://blogs.zdnet.com/projectfailures/?p=130 http://blogs.zdnet.com/projectfailures/?p=436 http://blogs.zdnet.com/projectfailures/?p=576 © Copyright 2009 Asuret Inc. All rights reserved.
  • 15. Devil’s Triangle relationships Conflicts of interest are embedded in the structure of the industry (customer gets fleeced)  Interlocking and conflicting agendas  Customer  System integrator (consultants)  Technology vendor  Confused buyers  Silos and internal conflicts  Wacky system integrators  Customer success vs. consulting revenue  Schizophrenic software vendors  Loyalties split between customers and integrators © Copyright 2009 Asuret Inc. All rights reserved.
  • 16. Oak Park Angst © Copyright 2009 Asuret Inc. All rights reserved.
  • 17. Oak Park, IL: Complete abandonment  Cost: $2M  Time frame: complete abandonment after 5-year project  Software vendor: PeopleSoft  Project goal: Replace payroll and financials  Failure: Accounting and finance errors, such as vendors paid twice  Causes:  Lack of Oak Park sophistication regarding enterprise software process, scope, costs over time, management, and so on  Low-skill finance employees, lacking basic computer skills, did not enter data into system  Insufficient change management and user training http://blogs.zdnet.com/projectfailures/?p=1304 http://blogs.zdnet.com/projectfailures/?p=1358 © Copyright 2009 Asuret Inc. All rights reserved.
  • 18. Project Ocean: Philadelphia’s biggest and most complex IT system. Kumar Kishinchand Former City Water Commissioner (Computer World, 8/10/06) © Copyright 2009 Asuret Inc. All rights reserved.
  • 19. Project Ocean: IT overrules experts  Budget: $9M; Actual: $18M  Schedule plan: 1.5 yrs; Actual: 3+ years  Software vendor: Oracle  Failure: Late, over-budget project  Causes:  Water billing is complex: off the shelf software requires customization  Oracle inexperienced: selected by IT department  Project manager / executive sponsor turnover  Finance dep’t in charge; Water dep’t was customer  Politics and empire-building  Separately: consultant billing irregularities http://blogs.zdnet.com/projectfailures/?p=220 http://blogs.zdnet.com/projectfailures/?p=250 © Copyright 2009 Asuret Inc. All rights reserved.
  • 20. Alignment mismatches drive poor decisions Poor communication, agendas, and different measures of success create alignment gaps:  Information silos  IT / lines of business  Internal / external groups  Distortions: poor judgment, politics, and personal agendas  Extreme case: “Successful” process / failed outcome © Copyright 2009 Asuret Inc. All rights reserved.
  • 21. Management pressure and the IT divide © Copyright 2009 Asuret Inc. All rights reserved.
  • 22. © Copyright 2009 Asuret Inc. All rights reserved.
  • 23. J.Crew: Management overrules IT?  Cost: $3M plus lost sales and dissatisfied customers  Failure: Impaired ability to capture, process, ship, and service orders  Causes:  Aggressive internal planning and schedule  Insufficient testing of new system before replacing old  Management accepted responsibility  Plausible scenario: management pressured IT to accept aggressive schedule http://blogs.zdnet.com/projectfailures/?p=1015 © Copyright 2009 Asuret Inc. All rights reserved.
  • 24. Industry analyst / vendor pay to play game Subtle, insidious, and real © Copyright 2009 Asuret Inc. All rights reserved.
  • 25. Solving the problem
  • 26. Sweeping changes are needed  Detect weak signals  Early warning systems  Locate problems, amplify message, and communicate to management  Create feedback loops  Increase management awareness  Create a culture of continuous improvement  Management must listen and act  Distortions interfere with success  Denial is the handmaiden of failure  Political agendas push against success  Poor judgment is endemic in failure situations  Industry structure contributes to repeated failure  Devil’s Triangle  Analyst conflicts © Copyright 2009 Asuret Inc. All rights reserved.
  • 27. Detect weak signals Work across departments to leverage the collective intelligence and experience of all stakeholders. © Copyright 2009 Asuret Inc. All rights reserved.
  • 28. Facilitate consensus across silos Use non-threatening techniques to:  Avoid bias  Remove emotion and political pressures  Create organizational consensus and enhance collaboration © Copyright 2009 Asuret Inc. All rights reserved.
  • 29. Identify vulnerability hotspots © Copyright 2009 Asuret Inc. All rights reserved.
  • 30. Pinpoint top management priorities © Copyright 2009 Asuret Inc. All rights reserved.
  • 31. Reveal mismatched expectations Executive management view: Business case has high vulnerability IT department view: Business case has low vulnerability © Copyright 2009 Asuret Inc. All rights reserved.
  • 32. Identify critics / champions Analyze differences in stakeholder opinion across the organization, helping management target areas needing communication, training, and support. Participant 10 Participant 11 Participant 12 Participant 1 Participant 2 Participant 3 Participant 4 Participant 5 Participant 6 Participant 7 Participant 8 Participant 9 Critic Champion © Copyright 2009 Asuret Inc. All rights reserved.
  • 33. Deliver comprehensive reporting Suitable for Board, management, staff, and partners:  Identify critical health indicators  Highlight specific vulnerabilities  Target immediate and actionable next steps © Copyright 2009 Asuret Inc. All rights reserved.
  • 34. Trusted, objective advisor  Independent authority on IT success  Absolutely vendor-neutral For more information contact: Michael Krigsman, CEO Email: mkrigsman@asuret.com Web: http://asuret.com Blog: http://blogs.zdnet.com/projectfailures + 1 (617) 905-5950 © Copyright 2009 Asuret Inc. All rights reserved.