The Cost of Project Failure — People, Processes and Technology
Technology projects are industry agnostic, affect billions of people and are still rife with inefficiencies that lead to so many of them failing.
Failure usually costs valuable time, money, effort, and other resources that are difficult or impossible to recoup.
Failed projects, ranging from Dyson’s electric cars project that lost £500m, or the U.S. State of Maine’s $35m ERP disaster or Nike’s $400m ERP upgrade that cost them an extra $100m due to losses are all examples of big institutions not being impervious to making project management mistakes.
These failures are not new, but to what extent could losses be minimised if more explicit and intentional emphasis was placed on people, processes and technology?
What does any project mean without meaningful and even behavioural considerations for the people who handle the day-to-day project implementation? Does the tech stack have any credibility without efficient, ratified and well understood processes?
People, Processes and Technology
Technology is only as good as the people behind the processes who operate, maintain, and improve it. What this means is people, processes and technology are intertwined, interconnected and reliant upon each other:
According to a Gallup report technology projects fail because organisations place more energy and emphasis on “rational” factors (such as internal processes, hierarchies etc) rather than employee’s psychological engagement, the author mentions:
Projects often fail because organizations put more emphasis on rational factors than on employees’ psychological engagement — and the cost to organizations is enormous
This disconnect represents not only an opportunity cost of lost time and money, but also highlights a more worrying negative side effect: low morale and disengagement.
Lack of Motivation
Unmotivated workers are more likely to leave, more likely to be less productive, more likely to create a negative atmosphere and a host of other, difficult to resolve issues.
Most candidly, no project can succeed in a negative and miserable atmosphere that induces stress and low morale.
Furthermore, when developing and delivering software solutions, morale must be kept high to medium for the duration of the engagement.
When inevitable blockers and barriers do emerge, the team needs plenty in the reserve to galvanise itself and get through; without this, a project is in real danger of not being completed, a harsh reality many projects deal with.
Communication Breakdown
According to a Business 2 Community survey updated in July 2022, the top five reasons IT projects fail:
- Change in organisations’ priorities — 39%
- Change in project objectives — 37%
- Inaccurate requirements gathering — 35%
- Inadequate vision — 29%
- Poor communication — 29%
A perceived change in direction, change in priorities and poor communication should be manageable with prioritising team members and stakeholders without them feeling disengaged and disillusioned.
Participants in this survey clearly felt the barriers between management and the rest were strong enough to cite them for the primary reason(s) for project failures.
If you prioritise people relationships, transparent communication and genuine consideration it’s likely that many of those project failure reasons could be reduced.
People Have to Buy In
When an organisation embarks on digital transformation, whether that’s green or brownfield, nothing moves without people. People remain the conductors, components and conduits between processes and technology.
According to research from Geneca, 75% of survey respondents admit failure on projects boiled down to a “lack of confidence,” citing projects that were “doomed from the start.” This suggests that there is a disconnect with the project goals and those implementing the project due to poor buy in from the SMEs and other stakeholders responsible for project implementation.
Stakeholder Management
Both internal and external stakeholder management is critical to successful technology implementations. Knowing who’s who, knowing how to deal with them, understanding their requirements, how to approach them and when with what and so on is of central importance. Stakeholders tend to fit into one of these categories:
- Partners
- Suppliers
- Regulators
- Employees
- Managers
- Owners
- Competitors
- Customers
Successful categorisation of all stakeholders is a good start and ongoing exercise because you immediately understand how the solution will affect them and their respective domain.
Also, project failure could arise by misallocating resources in the direction of one stakeholder (or stakeholder type) at the expense of others. Here’s detailed breakdown of external stakeholder management.
Plotting and reshuffling all your stakeholders on a matrix like one below is a small yet powerful way to maintain control over your stakeholders. Plotting power vs level of attention quickly arranges people into manageable buckets.
Moreover, managing stakeholders remains central to successful solution delivery, yet it can be overlooked and taken for granted in the day-to-day real world.
Mismanaging that vendor agreement or becoming too reliant on an external consultancy company are real examples of how projects ended up not being delivered on time and costing time and money.
Sponsor Buy In
Inadequate sponsor support was cited for 26% of project failure according to Business 2 Community, meaning over 1 in 4 projects fail due to lack of senior support.
When sponsors/decision makers are on board and engaged they tend to be some of the best allies when things do go wrong because trust has been cultivated due to prior and consistent inclusion.
Therefore, include them at key milestones and throughout (where necessary) and you’ll gain their trust and respect along the way.
Processes
A process is a series of actions or steps taken to achieve a particular goal. Effective process design considers the impact of implementation to staff and customers, the skills required to successfully implement the solution, the requirements needed and a host of other behavioural, physiological, and professional considerations.
According to a 2020 PMI report 11.4% of investment is wasted due to inferior project management processes, the report suggests firms that fail to properly integrate project management into their strategies see their outright project failure rate by a factor of 2/3.
The strategic inclusion of a dedicated PMO/business analysis resource should effectively cover, with sufficient skill and rigour, the demands of effective process design.
Carefully articulated and ratified process design/ business process modelling goes a long way to helping projects succeed as the data from PMI suggests.
Effective process design can be overlooked, and this is costly for many reasons. When embarking on a product build/project it’s critical to know the following:
- What processes do we need to solve the problem?
- What are the key steps to achieve that?
- What resources are we likely to need to achieve this?
You won’t have all the answers at the start as this is when the least is known. It therefore makes sense to build iteratively so you learn as you build, check this article out for why some large firms still struggle with agile methods.
A good high-level brainstorming session for example allows all key stakeholders to ratify and discuss potential solutions that will later go on to be detailed.
In truth, whatever style or method yields the best results, the best return, motivates and maintains high levels of morale is the methodology that should be used.
It just happens that agile methods usually have a faster and higher ROI simply due to the principal of delivering working software sooner than waterfall as well as being able to accommodate change a lot easier than waterfall too.
According to a 2020 Standish Group report Agile projects were successful 42% of the time, whilst their waterfall counterparts only 13% of the time; a big disparity. The graph below also plots when projects were challenged (neither passed but not complete failures) and complete failures.
Moreover, astute process design, ratified and reviewed consistently will be assimilated into a product and then sprint backlog and will be developed within a transparent and adaptive environment rich with consistent levels of inspection and accountability from all involved.
Processes are therefore synonymous with those creating, implementing, ratifying and eventually deploying them, and this should reduce the failure rate, as the Standish Group report shows.
Expect greater levels of engagement and higher levels of scrutiny and a better environment for processing (inevitable) changes throughout the delivery lifecycle.
Technology
Technology should always be the final piece of the puzzle. Technology represents the proverbial “icing on the cake” simply because it has no worth without motivated people and efficient processes.
Project failure in relation to technology according to several studies, including a 2020 study from Wellingtone that suggests 54% of surveyed participants do not have the correct collaboration tools and technology for sufficient project management.
Something as crucial as a collaboration tool boils down to not only the tool used (Jira, Azure Boards, VersionOne etc) but the personnel behind the tools, proper and effective setup, and astute people and process management as mentioned before.
Vendor Management
In a 2022 court case in the UK, tech giant IBM was ordered by the Royal Courts of Justice to pay £80m ($105m) due to a failed implementation for UK insurer Co-Op insurance. Co-Op Insurance commissioned IBM for a £50m IT transformation project in 2015.
IBM had the mandate to create a new underwriting system for the insurer. IBM were due to have made £125m to manage the system over the next 10 years, a £12.5m per year investment.
IBM had proposed to implement the transformation using agile methods as their preferred modus operandi, but Co-Op CEO Mark Summerfield lamented their use of agile, suggesting IBM’s implementation was “embarrassing,” saying the development method that was sold was “unproven” and “unworkable.” Summerfield went onto add:
“With the benefit of hindsight, it is obvious to me that we were sold a product that did not exist (a UK capable version of Insurer Suite) and contracted against milestones that were very unlikely to be met.”
A technology giant like IBM is not exempt from implementation disasters like this and this case proves that vendor selection and vendor management is a delicate and sensitive skill that requires careful management, realistic scoping, no or little disparity between RFP/sales pitch and the day-to-day implementation of the solution, a very common faux pas unfortunately, and closer relationships between internal and external stakeholders must be cultivated and maintained throughout the delivery lifecycle.
Key Considerations
- Was IBM’s agile approach not understood by Co-Op?
- Were Co-Op not as well versed on the day-to-day of agile methods?
- Why was the disparity between the sales and implementation teams so vast?
Rhetorical questions at this point, but the points are valid: only being well versed with your people and processes can lead to a sound decision-making when it comes to technology selection, vendor management and other tech related issues; overlook this and it will cost time, money, effort, and even reputation damage in some cases.
Conclusion
Tech projects fail for a combination of reasons. Seldom is there one critical and overwhelming reason why a project has failed.
In today’s article however, people, processes and technology has been outlined as the critical areas in which no project has any chance of success if these three critical areas are not properly managed.
All three are interlinked and have a critical dependency upon the other, remove, damage, or fail to maintain one component and all three fall apart and the project fails as a result.
Pay attention, know and master one, then two, then all three, then your chances of project success increase dramatically.
