Why do e-commerce IT projects fail

10 reasons: That's why IT projects fail

Although business and IT work better together today than in the past, many IT projects still go wrong. Read why it is and what those responsible can do better. [...]

The Boston Consulting Group has found that 70 percent of digital transformation projects do not achieve their intended goals. The "2020 Global Application Modernization Business Barometer Report" reads similarly. According to this, three out of four companies fail to successfully complete their projects for the modernization of legacy systems. The management consultants from McKinsey reported something similar a few years ago: The failure rate for large IT projects is 70 percent.

The reality is probably not as dramatic as it sounds. Few tech initiatives need to be considered a complete failure. It is more about the fact that only a minority of the projects related to IT transformation fully deliver the expected value contribution. Either they did not count themselves in retrospect or they do not meet the needs of the user.

"Sometimes the projects fail because of the technology, sometimes solutions prove to be inadequate or unsuitable for their purpose," observes Greg Stam, Managing Director at Ahead. Obviously, there are various factors that - often closely linked to one another - mean that IT projects do not achieve their goals. These are the ten most common problems.

1. Alignment is only successful at the C level

CIOs know that business and IT strategy must be closely aligned. But even if that is the case, executives often have difficulties in implementing and living such an alignment in their company areas. IT teams and business units that are supposed to work together and coordinate on technology-driven initiatives often fail to see how their project fits into the company's overall strategic goals and their respective roadmaps.

This lack of alignment on the subordinate levels then delays project runtimes, hinders implementation and impairs success. Greg Stam gives the example of a company that wanted to introduce a new system for more efficient data flow and better data analysis. The team responsible for the application was on the right track, but the colleagues responsible for data preparation were not in the picture. They did not understand the importance of the project or the schedule for completion.

2. No clear definition of project success

Although the digital transformation is right at the top of the agenda for most companies, if you ask what it should actually be about, you get many different answers. Thimaya Subaiya, Cisco Senior Vice President, Customer Experience, notes that the term is often overused and misused. “I keep seeing IT organizations that are supposed to be driving digital transformation, but in reality are just upgrading their systems. There is no link with the business requirements and metrics, ”says the Cisco manager.

CIOs and their business colleagues should have a clear idea of ​​when to call a project successful and which metrics to use to measure interim results and overall project success. At the latest, when the goal is constantly changing, extreme caution is advisable.

3. Projects are not prioritized

Even if business and IT are the same on all levels, projects can fail. The cause is often that executives do not prioritize project work and deny the resources necessary for success. “Sometimes the management levels move in lockstep when it comes to their priorities, but nothing is moving forward,” says Stams. “The employees who were supposed to be driving the project forward remained focused on their day-to-day business. They didn't know any better because executives failed to emphasize urgency and free up resources.

Difficulties always arise when companies add project-related tasks to the unchanged basic workload of employees. “The project is then integrated somewhere and becomes any part of the many tasks that are already causing a traffic jam in the IT organizations. Then the CIO comes up with the typical question: Why is nothing going on here? ”Observes Stam.

4. Change management is underestimated

Changes are always an uncomfortable challenge for employees, sometimes there is open resistance. If management teams can't cope with this, tech initiatives fall short of expectations. Statistics underpin the failures of many companies: The International Project Management Association has found (PDF download) that only 63 percent of companies take any form of change management into account in their projects.

Thomas Phelps, CIO of Laserfiche and lecturer at the University of Southern California, reports on the introduction of a CRM system in a company: There were no technical problems, but the employees refused to enter their contact data into the new central system. They viewed their customer contacts as their own personal value contribution, without which their importance for the employer would decline. The company had failed to prepare for such concerns and to take action to ensure that the new customer management system achieved a high level of user acceptance.

5. Potential risks are not recognized

The above-mentioned project management study from 2019 shows that only 60 percent of those surveyed consistently apply risk management methods during the course of a project. All others work without a net or a false floor. But if you don't make an effort to recognize and combat emerging problems, you quickly get into a mess. “There is always chaos in IT projects, you have to expect that. You need a process to deal with risks and problems, ”says Phelps.

These risks can be of a financial, organizational, operational or technical nature. They may be related to suppliers who promise a lot but deliver little. Deployment plans can also become wasted or user requirements can constantly change. You can prepare for something like this.

Phelps points to the problematic introduction of Healthcare.gov in the US in 2013. The application crashed within a few hours of its launch due to the unexpected rush of citizens. The project managers were surprised by this. The likelihood of a high level of exposure was by no means low, the situation could have been defused with appropriate planning and a reputation-damaging faux pas avoided.

6. Just a little agile

Cisco manager Subaiya does not believe in a project success when he hears those responsible say they have a perfect plan. He has more confidence in project managers who set themselves a 60 percent goal and leave room to continuously adapt and optimize. “You can't give the developers 100 percent specifications. You have to remain flexible in order to implement projects and to be able to react to changing requirements and market conditions. "

Most companies have introduced agile project methods, but they are not yet ready to implement the underlying principles in all matters. This would include, for example, the active use of feedback in order to constantly adapt development processes as well as the desired end result. The willingness to really take up such feedback is often not particularly well developed.

"Most organizations are still not well adjusted to agile methods," says Robert McNamara of the consulting firm Guidehouse. “You have conceptually assumed agility, but not in its execution.” As long as that does not change, projects will not deliver everything that users need and want.

7. IT professionals at the cat table

Although agile development methods depend on the feedback of future users, the business alone cannot decide. The technicians must have a significant say in the design of IT projects. After all, it is they who know the potentials and pitfalls of the technology they intend to implement.

For example, future users can create a long list of requirements for a new application. But it is the developers who know whether the desired functions are realistic and what side effects - for example excessive resource consumption or loss of performance - are associated with them.

It is therefore important that CIOs enable their teams to communicate well and clearly with the business side and to work with them. It is about creating a balance between user wishes and the expert opinions in IT. Then it quickly becomes clear to all sides what the end product should contain in order to achieve a high level of benefit.

8. Projects become unnecessarily complicated

While many companies are aligning themselves with a longer-term digital transformation, some executives try to take shortcuts and achieve their individual goals as quickly as possible. That may seem like a good idea at first, after all, nobody wants to be a straggler or miss out on market opportunities. In fact, going it alone tends to lead to complexity in projects and make their failure more likely.

McNamara reports on a company that wanted to achieve a better customer experience and had therefore decided to introduce various best-of-breed solutions - for several processes that were supposed to support customer interactions. As a result, the IT team got entangled in more and more integration tasks. "The intention was good, but in the end it took a lot of effort to bring the different solutions together so that they worked effectively," says McNamara. The project execution was considerably delayed and cost much more than planned. In addition, the bottom line was that the targeted results were not achieved.

McNamara believes it would have been better to choose the best possible software suite along with key business goals. That would probably have resulted in a timely, on-budget software implementation and met expectations. "The customer could have invested the money saved in this way in other process improvements in order to ultimately achieve all of the goals related to improved customer service."

9. Too few resources

CIOs around the world are struggling to find the right talent for their IT teams. According to the IT-Skills and Salary Report from the IT training company Global Knowledge from 2020, 60 percent of IT managers have problems filling vacancies. Even if board members are currently on the digital trip, they are unlikely to provide their CIOs with unlimited resources. The State of the CIO study by CIO.com says that only 49 percent of IT executives expect budgets to increase in 2021. 39 percent expect the IT resources to remain unchanged and 12 percent to decline.

According to Sunil Kanchi, CIO and Chief Investment Officer at the consulting firm UST, a lack of talent and tight finances can significantly limit the capabilities of an IT department. He knows what he's talking about, having seen for himself how a lack of full-stack developers has hampered the success of a customer's multi-million dollar IT project. The project was delayed by several weeks and exceeded the budget by 15 percent because about a dozen developers were too few on board.

10. Sticking to outdated technology

Sometimes IT projects fail because they are based on a legacy architecture. McNamara has seen this in a number of organizations where executives have persisted in sticking to outdated technology. Those responsible wanted to get more out of the investments they had made and to hold on to the familiar and seemingly tried and tested. Regardless of the motivation behind it: Such a decision can jeopardize the success of the project.

McNamara cites the example of a customer who installed a new logistics tool on legacy systems that contained financial and customer data. Upgrading these legacy systems was too costly for the customer; the tight budget was earmarked for the implementation of the new tool. The result was that the new tool could only do about half of the tasks for which it was actually intended.

“The company knew from the start that this project was suboptimal. They sensed that they would be limited by their legacy systems, ”says McNamara. What you probably didn't consider: Other companies in the logistics chain are unlikely to accept saving in the wrong place. The bottom line was that the project was a failure.

* Mary K. Pratt is a freelance journalist based in Massachusetts.