While no one can seem to agree on the exact cost of failed IT projects, I think everyone can agree the number-whether it's $6.2 trillion a year or "only" $500 billion a year-is too darned high. Too many IT projects fail, and IT needs to improve its success ratio if it hopes to remain relevant.
Olaf Tellefsen, an IT director within Volvo's CIO office, and Anders Johansson, head of Arthur D. Little's IT practice in the Nordic region, have introduced a tool called the IT Solution Portfolio Management (ISPM) Model that may improve the odds of IT success. The two Swedes say the model simulates the business benefits of large and complex IT projects, which should help IT focus on projects with a high probability of success.
As Computerworld's Mitch Betts reports, the model helps users run scenarios to simulate different decisions and see which one produces the most business value. The model also reveals the interaction among multiple projects and subsets of projects. The value in this, Tellefsen tells Betts, is in helping business decision-makers understand the consequences of different sequences. So, for example, they can compare the benefit of phasing out a legacy system now vs. doing so later. If any aspect of a project changes, the new information can be entered into the simulation to assess the impact.
This model may employ some pretty sophisticated algorithms. However, I can't help but think a big part of the reason it may work is because it requires IT and business leaders to talk about some pretty essential stuff while the project is still on the drawing board. According to Betts:
The model starts with business objectives and targets (e.g., reduce the time it takes to do X) and the metrics or key performance indicators.
As obvious as that sounds, all too often I think it's ignored. I base this on the many interviews I've done with consultants in which they emphasize the importance of having a clear business objective for IT projects, determining what success will look like and measuring progress throughout a project's life. If these steps occurred with any regularity, consultants wouldn't make so much money sitting people down and getting them to think about them. Betts seems to think so, too, writing:
The biggest effect of all is an intangible: Better conversations with the business decision-makers on the impact of IT. More clarity, less mystery. IT learns more about business goals and processes; the business learns more about the value of IT; and both sides get to see the bottom-line consequences of different IT decisions. Both sides will be speaking the same language.
A little more than a year ago, I wrote a post about a sure-fire formula for IT failure, citing a comment from Asuret, Inc. CEO and ZDNet blogger Michael Krigsman who said in his experience most problems with software arose from "expectation mismatches in the business, rather than technical, domain." He also shared seven factors that help determine IT project success: business case, stakeholder involvement, executive sponsorship, project management, change management, third-party relationships and resource availability.
Not coincidentally, working with the ISPM model would ensure that most, if not all, of the bases are covered.