When rolling out a new technology deployment in the enterprise or on the factory floor, the last words a project manager wants to hear from the CIO are, “Let’s deliver this on time and within budget, failure is not an option.” That’s because in all likelihood, failure is the biggest option.
Many—if not most—IT projects fail. A 2012 McKinsey Market Study of 54,000 IT projects by McKinsey & Company in conjunction with the BT Centre for Major Programme Management at the University of Oxford, found that half of all large IT projects—defined as those with initial price tags exceeding $15 million—massively blow their budgets. On average, large IT projects run 45% over budget and 7% over schedule, while delivering 56% less value than predicted. What’s scary is that 17% of IT projects go so bad that they can threaten the very existence of the company, the McKinsey report said.
Smaller IT projects may run a greater risk, as noted by a IAG Consulting 2009 report that looked at 100 companies with an average project size of $3 million. The report found that 68% of companies are set up for improbable success (they might succeed, but not by design). On the flip side, 32% of companies are “probable” when it comes to project success due to the investments they’ve made in the business requirements process.
The findings show that companies with poorly planned project practices will be on budget less than 20% of the time. And, 50% of the time the overrun on the budget and timeline will be massive, resulting in a higher final cost of $5.87 million per projects.
What Can be Done?
So, who—or what—is to blame? There are many reasons ranging from a lack of skills and an ineffective team, to a focus on budget and scheduling rather than on strategy and stakeholders. Just as important is the execution of the project. Companies that don’t fully understand the requirements of the project are also in jeopardy, as it is not always what is presented in the initial requirements document that is important, but how flexible the process of discovery is and the ability to implement new requirements along the way.
Quite often, the impact of big IT projects is not understood. For example, a new Manufacturing Execution System (MES) deployment is not only about installing and integrating technology in order to help with production management. Rather, it is about rethinking how business processes are managed and executed and the cultural challenges that may come from new technology forcing new business practices on a global scale.
Flexibility is a “Must” in Implementation
Agile development must be built-in to accommodate obstacles along the way—be it systems or people. To do that, all stakeholders need to be part of the deployment from the beginning to be sure the technology supports the business strategy. Project leaders must continually engage with all department heads to ensure alignment between IT and business needs.
Also, think about the future, specifically, how the proliferation of smart devices, known as the Industrial Internet of Things (IIoT), will impact manufacturing and enterprise systems. Given the increasing complexity of the network infrastructure, it’s important to bring in outside experts along the way to help with business analysis and technology deployment, if necessary.
Back to an earlier point, flexibility must be built-in to the process, be it to accommodate new business needs, emerging technology, or to rethink the overall rollout. To that end, consider how rigid the plan is. The pressure to get it right up in the beginning can create delays and cost overruns during deployment, contributing to project failure. And, consider how rigid the technology solution is – does it require the business to change to the software, or can the software change to the business?
It should be the latter, and, therefore using software in a private cloud should be an option. Cloud technology could also ease budget and deployment issues, provided a way to allow flexibility and process improvements are part of the initiative.
Of course, project management skills are not to be overlooked, including having rigorous processes for managing engineering requirements and change requests. In addition, maintain transparency of the project so that the CIO does not have to ask how the project is going—as he or she will have visibility into the entire process.
Most importantly, set the expectation. Even the most prepared project manager will run into budget and scheduling issues—the goal is to keep them at a minimum and be in that 32% of successful projects!
If you liked this article, here are others you might also find interesting:
