IT Failure and Waste

Michael Krigsman
Asuret, Inc.
IT waste:
617-905-5950
mkrigsman@asuret.com A world-class problem
© Copyright 2009 Asuret Inc. All rights reserved.

Failure is common:
30-70% of projects are
late, over-budget, or
don’t meet plan.


Total failure worldwide:
maybe $6 trillion (SWAG*)

*silly wild-ass guess
http://blogs.zdnet.com/projectfailures/?p=6142


Many of us
ignore the warning signs


So What?
“That’s the IT Department’s
problem, not mine.”


Nightmare
S c e na rio
Levis can’t fill orders
for one week = 98%
decline in quarterly
profits

© Copyright 2009 Asuret Inc. All rights reserved. Image © LS&CO

Understanding failure


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


Managing pain was part of the plan.
Adrian Sannier
University Technology Officer, ASU
(Wall Street Journal, 9/25/07)


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


American LaFrance:
Custom emergency equipment


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



[W]hen you’re marching through hell,
just keep marching.
Charles Burbridge
LAUSD’s CFO
(LA Times, 3/19/07)


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=576 © Copyright 2009 Asuret Inc. All rights reserved.

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


Oak Park Angst


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


Project Ocean: Philadelphia’s biggest
and most complex IT system.
Kumar Kishinchand
Former City Water Commissioner
(Computer World, 8/10/06)


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


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


Management
pressure
and the IT divide


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



Industry analyst /
vendor
pay to play game
Subtle, insidious, and real


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


Detect weak signals
Work across departments to leverage the collective
intelligence and experience of all stakeholders.


Facilitate consensus across silos
Use non-threatening techniques to:

 Avoid bias
 Remove emotion and political pressures
 Create organizational consensus and enhance
collaboration


Identify vulnerability hotspots


Pinpoint top management priorities


Reveal mismatched expectations

Executive management view:
Business case has
high vulnerability

IT department view:
Business case has
low vulnerability


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


Deliver comprehensive reporting
Suitable for Board, management, staff, and partners:
 Identify critical health indicators
 Highlight specific vulnerabilities
 Target immediate and actionable next steps


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


IT Failure and Waste

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (15)

Similar to IT Failure and Waste

Similar to IT Failure and Waste (20)

More from Michael Krigsman

More from Michael Krigsman (9)

Recently uploaded

Recently uploaded (20)

IT Failure and Waste