October 1st, 2007

6 tips to reduce IT project failures

Posted by Michael Krigsman @ 4:02 pm

Categories: CIO issues, Consulting, Documentation, Financial impact, IT issues, Implementation, Project failures, Project strategy, Project success, Training, Vendor relationships

Tags: Software, Project, Information Technology, ROI, Roi/Tco, Tools & Techniques, Finance, Managerial Accounting, Management, Michael Krigsman

Depending on which statistics you read, significant failure afflicts approximately half of all IT projects. In general, IT project failures occur when one of the following conditions is present:

• The established budget is exceeded
• The project is not completed within the planned schedule
• The project scope must be reduced to achieve completion within time or budget

The following six tips can help avoid IT project failures, especially in enterprise software deployments. Some items on this list were inspired by a study commissioned by SAP, and conducted by the University of St. Gallen.

1. Define project scope accurately. According to a recent study by Computer Associates, most projects fail because the initial scope was not defined accurately or in sufficient detail. From the SAP study:
   

   “A realistic project scope eliminates exaggerated expectations for an implementation project and thus supports fast implementation times.”

2. Define clear budget and time specifications. Project teams are often under pressure to conduct fact-free planning, which virtually guarantees an over-budget or late project. When realistic, planned budgets and schedules are linked to a carefully defined project scope, the project will likely succeed.
3. Define the ROI clearly. Enterprise software implementations should always be based around a solid business case, at the heart of which is a planned ROI. Be sure the ROI addresses implementation costs, and does not simply factor in the software license fee alone.
4. Avoid software modifications. Don’t write custom code — period. This avoids complicated and unexpected development problems, and ensures that downstream software upgrades can be applied without too much strife.
5. Use external consultants carefully. Expensive, third-party consultants can quickly bring technical expertise to the project. However, use those resources judiciously, or your expenses may well go over-budget. In addition, be sure to develop in-house expertise, to avoid permanent dependency on high-paid external resources.
6. Change management, documentation, and training are important. To be successful, users must understand the project’s goals, status, and impact on their jobs. Many projects pay too little attention to training and documentation, especially when the project starts to run over-budget. This oversight makes reduces productivity and can negatively impact the project ROI. In extreme cases, users simply don’t use the new software, bringing the effective ROI to zero.

Follow these six tips, and I guarantee your project will be well-positioned on the road to success.