Information systems are complex both from a technological and organizational point of view, as well as from an economic point of view, so it is difficult to estimate the funding and the results obtained for the implementation and maintenance of such systems. It is believed that 50%-70% of IT projects fail, i.e. do not fulfill the initial definition of the goal.
In this article, I have summarized the main conceptual errors that lead to IT project failures and how to pay attention to the aspects to minimize the impact of these risks.
We buy a product that will increase the productivity or quality of our business processes
For example, it happens that the customer perceives the information system creation project in a simplified way and expects that as a result of the project he will receive some kind of finished technical product – such as a refrigerator, which is bought once and then it functions exactly the same for 10 years.
But an information system is not a product like a refrigerator, but rather a formation like a city. A city that is developing and undergoing redevelopment, there are repairs to be made, strangers to be allowed in, and rules to be followed. All these works for the use, development and maintenance of the city require a certain amount and specialty of people, who are an integral part of this city, because without them the city does not function.
Who should take responsibility for the IT project?
It can often be observed that IT project management, decision-making or preparation is handed over to IT specialists. Moreover, such an approach is implemented not only by small organizations, but also by large and even governments.
Although IT specialists are important in an IT project, the mutual balance of various interests must be taken into account in order to create a system that will ensure the set goals in the long term.
When forming a project team, the following roles, competences and interests must be represented:
- Project manager – no matter how large the project is, the main executor and responsible person must be one person, because collective responsibility has been proven many times to be an ineffective mechanism.
- IT director – a person or group responsible for infrastructure development, specific technologies and their viability in the long term, for cooperation with other systems, for attracting technical personnel and external services.
- Developer – a person or organization that has the technical ability to create a software product, as well as provide advice to business representatives on best practices and costs.
- Business representatives – business analysts, system analysts, process managers. These are the main definers of the requirements and therefore actually determine what kind of system will be built. However, this is not a homogeneous and unanimous group of people, and a decision-making process must be created within these individuals. Typically, a responsible person or organization is determined, which decides the priorities and whose requirements need to be implemented in general.
- Maintainers – these are the persons who will ensure and coordinate the technical, as well as functional and substantive operation of the system, as well as provide change management. It is a mistake to connect these persons to the project late in the system implementation cycle, because then it is often no longer possible to qualitatively realize many of the requirements of the maintainers. In addition, there should be a mechanism for transferring maintenance, change management and investment decision-making to higher authorities.
- Finances and costs – accounting records the facts, but the return on investment, cost capitalization and depreciation rates are defined by someone who thinks about the economic viability of the project. Often there is no such separate role in the project and therefore the economic feasibility is so unclear, besides, such an economist should know the specific business and technology sectors used in order to be able to make future forecasts. If no one fulfills the duties of this role, there is a risk that the cost volumes cannot be predicted and controlled in time.
- Cooperation partners – resource exchange partners, legislative process partners and others who can significantly influence the outcome of the project, but have no direct influence on them. The plan of risk management measures should provide for what to do in situations when these partners do not perform as expected of them. A risk mitigation plan can significantly change the intended course or even the goal of the project.
You might think that small projects don’t have all these roles, but even if there is only one person responsible for the whole system, you still need to make sure how these different approaches will be implemented and these different interests will be represented. However, in large-scale projects, when creating a project team and setting goals, it is necessary to try to achieve a balance of interests, a balance of duties and rights, a balance of ambitions and opportunities.
Setting project goals
Going back to the analogy of the refrigerator and the city, we can easily imagine what the functions of the refrigerator will be when it is installed, but the cities, each one is different, for example, one is by a river and another is on a mountain, one has a healthy population and another is forbidden to build houses higher than 5 floors. So the applicable solutions and even the results are different in each specific case. Today, it is common to use Agile methods in project management, which allows defining and realizing short-term goals. It also allows timely response and adaptation to various milestones in the development of the information system. Which is a very adequate approach in today’s changing everyday life. However, this Agile development process should not be left without a long-term vision and investment monitoring, because the amount invested creates obligations in the future, i.e. the more invested, the higher the cost of restoring and maintaining the system.
I often see in projects financed by the European Union that the information system is given generous funding and the state representatives try to think of the maximum number of functions that this system could provide, just to absorb all the available funding. However, a similar approach can also be used if generous financing is not available, for example, a small entrepreneur who wants to solve several problems at one investment and therefore sets several goals with the thought “so that he does not have to return to this issue later”. But the more funding is invested and the more functions are provided, the higher the [capital] renewal and maintenance costs. The owners of the system hope that these costs will somehow be absorbed by the already existing funding and business processes. But it’s an illusion that doesn’t work in the long run.
If the system does not have a sufficient maintenance budget, it rapidly loses its value and gradually also the productivity it provides. This drop in value is often initially noticed only by experts, and therefore their requests for additional funding are often rejected, because it is difficult to connect these additional expenses with business processes that provide specific benefits. But this invisible debt accumulates and over time manifests itself in long and expensive implementation of changes or insufficient, overburdened or inexperienced support staff.
Therefore, when investing in an information system, one should strive to reduce the amount of investment and maintain an appropriate level of renovation and maintenance funding, which is proportional to the total amount of investment, or a certain percentage of the total amount invested. It should be noted that the ratio of the renovation and maintenance budget to investments is constant, but nominally it is an ever-increasing amount that needs to be planned as an increasing cost. A process must also be put in place to ensure the reduction of capital and functionality. For example, if a register or function is no longer used in the system to the same extent as before, then it can probably be eliminated.