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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.

        © Copyright 2009 Asuret Inc. All rights reserved.
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.
Many of us
ignore the warning signs




        © Copyright 2009 Asuret Inc. All rights reserved.
So What?
“That’s the IT Department’s
    problem, not mine.”




         © Copyright 2009 Asuret Inc. All rights reserved.
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
Understanding failure




       © Copyright 2009 Asuret Inc. All rights reserved.
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.
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.
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.
American LaFrance:
Custom emergency equipment




             © Copyright 2009 Asuret Inc. All rights reserved.
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.
[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.
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.
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.
Oak Park Angst




  © Copyright 2009 Asuret Inc. All rights reserved.
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.
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.
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.
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.
Management
   pressure
and the IT divide




              © Copyright 2009 Asuret Inc. All rights reserved.
© Copyright 2009 Asuret Inc. All rights reserved.
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.
Industry analyst /
vendor
pay to play game
Subtle, insidious, and real




                       © Copyright 2009 Asuret Inc. All rights reserved.
IT Failure and Waste
Solving the problem
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.
Detect weak signals
Work across departments to leverage the collective
intelligence and experience of all stakeholders.




                      © Copyright 2009 Asuret Inc. All rights reserved.
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.
Identify vulnerability hotspots




                © Copyright 2009 Asuret Inc. All rights reserved.
Pinpoint top management priorities




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

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IT Failure and Waste

  • 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.
  • 27. 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.
  • 28. Detect weak signals Work across departments to leverage the collective intelligence and experience of all stakeholders. © Copyright 2009 Asuret Inc. All rights reserved.
  • 29. 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.
  • 30. Identify vulnerability hotspots © Copyright 2009 Asuret Inc. All rights reserved.
  • 31. Pinpoint top management priorities © Copyright 2009 Asuret Inc. All rights reserved.
  • 32. 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.
  • 33. 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.
  • 34. 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.
  • 35. 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.