The Hindu Business Line : Fear of failure

From data processing in the 1960s to process and office automation in the 1980s to business integration and restructuring in the 1990s... technology has become increasingly integral to business, a strategic necessity.

And with the increasing complexity of technology initiatives come troubling statistics on the failure rate of large technology projects.

According to the Standish group, 31 per cent of IT projects are cancelled outright and over half have serious performance issues but escape the same fate. In contrast, a 3 per cent overrun on a construction project is often the trigger for a public enquiry.

Software projects also encounter the same plight. The CHAOS Report published by the Standish Group has estimated the average success rate at 16.2 per cent and that is on projects completed on time and within the budget. The news is worse in larger companies with a 9 per cent success rate. Findings further reveal that in most cases, the originally proposed functions and specifications are not more than a mere shadow.

Smaller the better

Smaller companies do much better. A total of 78.4 per cent of their software projects get deployed with at least 74.2 per cent of their original features and functions.

Every year, thousands of IT projects are cancelled before they are completed. These projects could be new application software (custom or off-the-shelf), new network architectures or even desktop operating systems, but they share one characteristic: they are called off by management before completion. The company never reaps the anticipated benefits and millions of dollars go down the drain.

"Most technology projects tend to fail due to lack of executive support, lack of user involvement, lack of clear-cut business objectives and poor scope of management," says Sowmya Banerjee and Chengappa Kodendera, Co-Managing Directors, Sapient Corporation.

Sapient, incidentally, does not have a product but by engaging "the right kind of people with right attitude and culture" weaves the magic... makes the project work, observed Chip Register, COO of Essent Energy Trading BV.

The primary reasons cited for the failure are:

Poor definition of project scope — Take the automation of banking services... Incredible as it may seem, the work on the project commenced long before its scope (core banking solution platform) was decided. Fundamental design and architectural decisions were made, hardware acquired and programming commenced. Substantial resources were committed and the work got well under way. At this stage, CBS implementation got finalised and the feature-set defined, necessitating re-evaluation of some earlier decisions. A detailed project specification report would have helped save time and cost, besides helping banks switch over rather smoothly.

Lack of end-user involvement — The specifications could have been met and the project delivered on time and within budget. But if the end user is not willing to use it, the project will fail. Users more often are unwilling to use a new system if they do not understand it or if it fails to meet their needs.

Lack of commitment by the top management — IT projects can be very expensive and could take months or even years before completion. The management, besides being committed to the project, should ensure that the technology adopted is `appropriate and the best'.

Delay in completion — Caused mostly because of changes in feature-set, changes in the underlying project architecture and design, and poor estimation of the project time at the start.

Cost overrun — Apart from delay in completion, IT projects can easily run over budget if the attrition rate is high, leading to increased costs. A thorough testing before deployment is equally important to ensure hassle-free transition.

Sapient, Sowmya says, helps companies develop enterprise architecture blueprints in highly compressed time frames. "Our proprietary research-driven insights have enabled us to build technology solutions that are designed for adoption. The value of technology comes with optimal use of that technology, whether by employees, suppliers or customers."

Efficiency control

Lt Gen Gary McKissock, Deputy Commandant for Installations and Logistics, US Marine Corps, has said that by defining ways to significantly streamline its supply chain processes and reduce inventory, Sapient helped bring about significant improvements. "Sapient has helped us down a path. We have since become a leaner and effective fighting force," he says.

"We help organisations reduce cost through management of knowledge content and workflow, optimise employee performance through support tools, implement process and organisational change, and increase revenues through improved market penetration, customer loyalty and retention," says Sowmya.

Massachusetts Institute of Technology's OpenCourseWare (MIT OCW), for instance, is a Web-based publishing system that provides free, searchable access to almost all its course material. By leveraging on Sapient's Application Management Services capability, MIT sources said they could provide round-the-clock email and customer support .

US-based packaging products maker Rock Tenn Company has said that Sapient helped it meet competitive and operational challenges by developing a technology roadmap and implementing enterprise technology solutions.