Planning for Success, not for Failure

By Adam Ripley | 25 April 2014

Much work has been done around the issue of technology project failure. Failure rate estimates range from 10 per cent to a whopping 85 per cent in terms of the corporate tech projects that fail to achieve their goals. So why is this? Over the years, different organisations and industries, academics and analysts have explored the reasons why so many projects fail to reach the mark.

The reasons are – of course – manifest. But one common denominator does seem to be weaknesses in the business plan. It might be a truism, but if so many corporate executives are dissatisfied with project outcomes, it stands to reason that improvements can be made in the business case, which will improve the success rate and the return on IT project investment.

Some research that we have conducted recently with Professor Joe Peppard from the European School of Business and Technology who has a special interest in this area, confirmed that many people who work in the financial services space tend to have a very resigned, almost cynical approach to business planning.

The problems tend to be evident right from the start. Firstly, even the motivations for building one can be skewed. The business case is often part of a process that executives must comply with. They realise that they have to have one – invariably to get the budget signed off for the IT investment as 81 per cent of the respondents in our research noted – but few viewed the business plan as a framework for success. Once drafted, they are all too often parked.

But the business case should be a living document, which tracks the parameters of a business technology project as it progresses. There are companies that develop the business case in the right way - to track successful outcomes - but according to our research they tend to be in the minority.

There are other factors that muddy the waters with business cases for technology investments. Take the steering committee, for example. Its role is often confined to an administrative and reporting function, rather than providing the necessary guidance. Few can boast having technology expertise, which often inhibits their influence.

When it comes to benefits, the majority of organisations don’t really have a grasp of how they will be achieved. Our research demonstrated that under half of respondents said that their business cases for IT investments provided clear direction as to how the benefits will be achieved. So how does the other 45 per cent cope? If they’re not measuring it, they can’t be managing it particularly well and how can the project be measured on achieving successful outcomes? Benefits tend to lack robustness in business cases – there tends to be an over-reliance on ROI as a measurement, when a financial benefit is not always relevant.

When you look at failure rates and what should be the cyclical nature of technology projects, the research flagged that worryingly only 51 per cent report that project reviews are undertaken. Do banks tend to hide their heads in the sand and just move on to the next? So much can be learned from a project that has gone belly up – we shouldn’t just ignore bad outcomes.

If organisations continue to take the same approach to business planning, it’s likely that the failure rate for IT investments in the financial services sector will continue to be at an unacceptable level. Being more strategic, realistic and making sure that project out comes and benefits are measurable will be a good starting point. It takes time to build the right business plan – and the right people need to be involved – rushing it just to get the budget green-lighted is not the ideal scenario. But if the current failure rates of technology project failure are anything to go by, we could be saving our industry many millions through more effective business planning.

 

By Adam Ripley, Managing Director and Chairman at Certeco

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