Throw a coin in the air. There is a 50% chance of heads and a 50% probability of tails. Today, based on a recent study with 113 process companies, an organization's probability of success with an IT project is almost the same as the toss of a coin. Based on a recent study of 113 process manufacturers, only 58% of companies report that their projects meet their business objectives. So, within manufacturing organization, the chances of an IT project meeting successful business outcomes is about the same as a coin toss. Scary? Yes, I think so.
Lets face it, getting a new project kicked off is tough. The average company spends 1.7% of revenue on technology investments. More and more of this budget is allocated to maintenance support and systems support. As a result, the funds for new projects are fewer and far between. The IT budget is being squeezed. As a result, the hurdles to get money and kick-off a project are higher. There are fewer projects and the technologies are changing fast.
Does this mean that organizations should not attempt to do an IT project? No, we do not think that this is the answer. Instead, we believe that companies need to take five actions to improve their odds of success. These observations are based on work with over 500 companies over the past ten years.
Step 1. Educate the Line of Business User. Line of business users need to take responsibility for project success, but most business users do not know enough to scope and clearly define business requirements. In addition, the IT teams often work in silos. They understand IT, but lack the understanding of business requirements. Business users need to educate themselves through conferences, structured networking and work with strategic vendors. Action item: This can take different forms in different organizations. Experiment and define an approach that can work for you. There are many possibilities. Set aside funds within a supply chain center of excellence for education, and support innovation spending to better understand new technologies without being hamstrung to have a formal project with a well-defined ROI. Support technology innovation and test and learn. For example, one client that I work with hosts an annual IT innovation day and invites technology companies and consultants to participate. The good news is that many analytics projects are small and incremental with sequential learning. (This is a very different approach than the big-bang approach of ERP.) Another organization that we work with funds innovation funds for business groups to tap to test and learn with new forms of analytics. Project teams submit a proposal to a cross-functional team that reviews potential projects.
Step 2. Consider the Redefinition of Career Paths. Some of the most successful companies that I have worked with have promoted a line-of-business leader into the role of the CIO. When this happens, the CIO has a greater tendency to serve the business. Additionally, the companies that I have worked with that are the most progressive in the management of successful IT projects have career ladders that encourage the cross-functional movement of IT and business leaders between organizations. In these organizations, there is a more natural interchange between groups. The bigger the walls of the silos, the greater the probability of project failure. Additionally, the more IT outsourcing within the organization, the bigger this issue can be. Action Item: Consider redefining the organizational career paths to develop a greater opportunity for cross-functional process development.
Step 3. Get Clear before You Contact Solution Providers. Some of the largest project failures that I have witnessed started with a project team that was unable to make a decision on a project after an extensive vetting of technology options. When a project team is unable to sort requirements to sort out which technologies and approaches to create the most value, the project starts out badly and is doomed for failure. Instead, the team needs to start with business outcomes and work backwards to requirements. The danger of contacting technology suppliers and consultants first is that the larger technology ecosystem tends to think in feature and function language. As a result, it is important to get clear before you get started. Action Item: Define a project outcome and decision process to make a final decision before you get started. Send out fewer RFPs and work on more upfront definition.
Step 4. Be Realistic. Lets face facts. Today, getting technology funding is tough. As a result, many projects are doomed to failure before they get started because they are saddled with unrealistic expectations before they get started. Action Item: Set reasonable expectations and stick to a focus on business outcomes.
Step 5. Don't Hamstring the Project with a Sub-standard Solution from a Strategic Vendor. Many companies have ERP backbones for transactions or an IT standard for analytics. Over the last decade, the business organization has been hamstrung by a well-intending IT organization to use these 'more strategic vendors.' There is a goal to have fewer vendors and one throat to choke. The unfortunate reality is that the gap between strategic vendors and innovation has grown in the past five years creating an opportunity cost of the organization. With today's options for hosting and cloud, the organization needs to release these requirements and free the organization to drive new levels of innovation. Action Item: Help the organization make the right balance between IT standardization and evolving technologies. The pendulum has swung....
So, can you beat the odds? We hope so. Let us know how we can help. We think that a successful business project should have better odds for success on an IT project than the flip of a coin.
Did I miss any that you would add? Please let me know. I love getting responses on my blog.
All the best....