According to the Harvard Business Review, one-in-six IT projects have project overrun costs of 200 per cent, while a McKinsey & Company study in 2012 found that overall, projects deliver 56 per cent less value than predicted.
When it comes to bad IT purchasing decisions history has an uncanny knack of repeating itself. It was in 2011 (and to much public outcry), that the UK’s £11 billion NHS National Programme for IT was embarrassingly ditched. Less the three years later, the government was forced to ignominiously scrap the flagship £350 million IT system supposed to deal with a backlog in immigration and asylum claims.
Sadly, mainstream business often doesn’t fare much better. So, if you don’t want to be one of those IT directors hauled up before an unhappy CEO, some simple advice can go a long way.
The most common reason cited for why projects fail is that the tempting, one-size all approaches no longer work. But it’s not just that. IT purchasing decisions can also come back to haunt you when projects begin life with poorly scoped-out definitions and aims; where pressure to gather user requirements becomes the sole driver, not real business performance outcomes (a lack of so-called ‘Earned Value Management’).
Most crucially, bad purchasing is avoided when proper communication is established. Unnecessary and ad-hoc software fixes – which themselves create long-term compatibility issues – occur when unexpected problems have to be resolved quickly. Stakeholders are often informed of critical issues at a stage when the impact on costs, timelines and scope are already significant or irreversible.
Generally speaking, the technology itself is not the problem, but the implementation of it. This cannot be underestimated. Research by IAG Consulting suggests firms starting off with poor business analytics capability will have three times more project failures than successes. They will pay a premium of 60 per cent on time and budget when they use poor planning, while 41 per cent of IT budget for software, staff and external support will be consumed by poor set-up planning and measuring.
However, this doesn’t mean IT directors are always in the clear. The cloud may now be tempting buyers away from single enterprise-wide platforms, but vendors are still leading purchasers down the avenue of single-providers supplying everything, rather than letting them plug in best-of-breed solutions that might be more applicable and configurable for the job in hand. The ‘Buyer beware’ axiom is more applicable than ever. Proper tendering, expecting a wide roster of suppliers to pitch and even give you software to test, should now be common-practice.
Multi-year SLAs are also a common theme in purchasing for outsourced IT services, and experts agree it is the buyer – not the provider – that should still be in charge of dictating, and even demanding, specific agreement, including penalties for missed targets.
Get all these things right, and the chances are your purchasing decisions will have less opportunity to bite back.