Consultant says beware hidden costs of bad IT projects

Milwaukee, Wis. — Hidden factors may contribute as much to the high failure rate of information technology projects as the easily identifiable suspects, technology executives were told Wednesday.

Robert Balon, a principal in Clerestory Consulting in Chicago, delivered that sobering message Wednesday at the Milwaukee Athletic Club during a Technology Executives Club seminar on IT governance and project management.

A show of hands indicated that most in the audience have had bad project experiences. Throughout the seminar, they were advised to implement an IT governance model with the aid of assessment frameworks like COBIT (why to remediate) and ITIL (how to remediate), and program tools like Project Office. Balon, who has been studying IT projects for several years, said these aids provide no guarantees.

"Pick your favorite model - COBIT, Six Sigma - but the problem is we're still seeing big projects fail even with these tools," Balon said.

While the usual suspects - lack of alignment with business goals, poor executive sponsorship, and cultural resistance to change - can doom projects, some factors aren't readily apparent. To illustrate some of the invisible injuries, Balon played a Power Point version of Jeopardy! and he started with the statement, "not all business requirements are created equal." "Where are the important business requirements for your project," he asked. The answer: they are lost in a sea of (three-ring) binders.

Balon said the average enterprise technology project consumes between 20 and 40 percent of operating margin, making failure an expensive proposition. Rather than spending early and often, he advised technology managers to identify unworthy projects with early proof-of-concept testing.

Poor training, or the simple lack of training, is another factor in bungled IT projects, a failing that is well known. What isn't as well known is that between 40 and 60 percent of user time is spent on activities that have nothing to do with training, Balon said, and users should be trained on the entirety of their new jobs, not just how to use new software. He recommended scenario-based testing as the foundation for training program development.

Reporting habits are another factor in IT failures, he added. It doesn't matter how many reports are developed on an enterprise technology project as long as they contain relevant information. A report on the status of technology implementation has little value if IT managers lose sight of key information that business leaders need to make decisions.

The number one cause of what Balon called "frequent yet avoidable project surprises," ones that compromise project success, is poor communication. Communication is a process, and Balon suggested targeted communication plans for employees, customers, and suppliers, and regular status and stakeholder meetings. Communication events should provide forums for challenging the impact of scope changes, and they should be designed with the intent of informing, gaining input, or achieving some kind of action, he added.

Other speakers said constant communication about technology projects is an effective way for IT departments to build credibility in private- and public-sector organizations. Greg O'Hearn, applications development supervisor for the Milwaukee Metropolitan Sewerage District, said the goal should be transparency for users. "With the cultural aspect, especially in government, you have got some real issues to wrestle with on a regular basis," he said.

In developing a governance model, technology executives were encouraged to align IT projects with business goals, and map strategic business requirements to testing, training, result metrics, and other areas of implementation.

While the use of a governance model is not a full-proof way to approach projects, companies with above average IT governance tend to get a higher return on assets than organizations with weak governance, according to Carissa Rollins, senior manager for the Milwaukee office of Whittman Hart.

One important management trait is the willingness to abort an expendable IT project that is well on its way to completion. During occasional reviews, if it becomes apparent that a project no longer is aligned with corporate strategy, "it makes no sense to move forward with it," stated Karina Willes, project manager for Foley & Lardner. She said the law firm's IT organization maps to the firm's business strategy with a well-defined project management life cycle, including the opportunity for users to evaluate technology before implementation.