It appears that we have a problem when it comes to executing enterprise IT projects.
We’re not very good at it. In fact, playing Russian Roulette with five bullets in the gun (five out of six) actually has better odds of success than running a large IT project.
Almost everyone in the industry has, at least some inkling, that this problem exists. But as with death, and such other unpleasantries, we don’t like to talk about it too much. It makes us uncomfortable.
In our defense, even if we were to get past our aversion to the awkward, we still have a problem with this problem. We don’t know how to describe it.
We’re not really sure what’s causing it. We know that our IT projects don’t work out as well as they should. We know that this situation has endured for a long time. We know that others experience it as well. But we don’t know what to do about it.
By we, I’m referring to those of us who charter, manage, work on, are affiliated with, use, are impacted by, pay for, sell, or implement enterprise IT projects and any stockholder in any business that does. If you fall within that spectrum, I’m afraid that we, includes you. And, to be even more specific, the problem I’m referring to is our abysmal record of being unable to execute these projects successfully.
There are several aspects to this story. Over the course of the next several weeks—and perhaps months—I intend to address many of them. However, for the immediate future—meaning the next couple of days—I would like to start by framing the issue from three perspectives: frequency, cost and cause.
The topic of today’s missive will be the frequency of enterprise IT project failures and what the term “failure” actually means.
If you listen to the luminaries of the IT universe (Gartner, IDC, Standish, HBR, Capterra, et al), you get fairly consistent estimates of project failure rates. These authorities report that using even the most forgiving criteria, only twenty-nine percent (29%) of enterprise IT projects are successful. For the sake of this and all future conversations, I’ll be generous and round up to thirty percent (30%).
I will also note two things. First, seventy percent (70%) of all IT projects—seven out of ten—fail. Second, these failure rates have remained consistent over many years.
Now, in the interest of fairness, seventy percent isn’t quite as bad as it appears. Not all failures are created equal.
Fifty percent (50%), one half, of IT projects just experience some significant, or in accounting parlance, some material level of failure. In other words, they’re way (30 – 300%) over budget, way behind schedule or way under-deliver. The system, or a very big piece thereof, never does what it was supposed to do or what the user community wished it did. It never lives up to the promise and hype.
Only twenty percent (20%), one out of five, are complete and utter disasters. Total failures. Smoking craters that leave management no recourse but to write everything off, and participants no recourse but to find other jobs.
But wait, there’s more.
If a project costs over one million dollars, the odds of failure jump by fifty percent (50%). That means that the odds of a total failure for larger projects are thirty percent (30%)—roughly one out of three. The odds of a significant (or material) failure rise to about sixty-five percent (65%)—almost two out of three.
The odds of a true success for an enterprise IT project in excess of one million dollars—one that fully delivers as promised, on-time and on-budget—fall to about five percent (5%). That is only one success out of twenty (20) attempts.
McKinsey & Company working in conjunction with Oxford University found that seventeen percent (17%) of such large enterprise IT projects, one out of six, go so badly, they threaten the very existence of the organization.
Again, to put this in situation in context…
Playing Russian Roulette with five bullets in the gun (five out of six) offers better odds of success than running a large IT project. And the risks of even undertaking such a project are equivalent to playing a “regular” game of Russian Roulette (only one out of six bullets in the revolver) with the life of your business.
Please set aside for the moment that you would have to be insane to play Russian Roulette under any circumstances. And please do not forget that avoiding technological innovation altogether guarantees death by other means—the market and your competition will slowly eat you alive.
We are not being presented with much of a choice! At the risk of being redundant, we have a problem.
I’ll leave you now and let those realities sink in for a bit. I promise to be back shortly with more encouraging news.