it failure and waste

Michael KrigsmanAsuret, Inc.617-905-5950mkrigsman@asuret.com

IT waste:A world-class problem

Failure is common:30-70% of projects are

late, over-budget, ordon’t meet plan.

Total failure worldwide:maybe $6 trillion (SWAG*)

*silly wild-ass guess

http://blogs.zdnet.com/projectfailures/?p=6142

Many of usignore the warning signs

“That’s the IT Department’sproblem, not mine.”

So What?

NightmareS c e n a r i o

Levis can’t fill ordersfor one week = 98% decline in quarterly profits

http://blogs.zdnet.com/projectfailures/?p=917http://blogs.zdnet.com/projectfailures/?p=935

Understanding failure

IT Project Success

Business Case

StakeholderInvolvement

Executive Sponsorship

Project Management

Change Management

Third-Party Relationships

Resource Availability

Business vulnerabilities, not technology, cause the problems

Managing pain was part of the plan.Adrian SannierUniversity Technology Officer, ASU(Wall Street Journal, 9/25/07)

Guns at Arizona State University

Expected: $70M; Plan: $30M Typical schedule: 4 yrs; Plan: 1.5 years Software vendor: Oracle Project goal: Replace payroll system Failure: Incorrect paychecks cause severe morale

problems, including need for armed guards on payday Causes: Complexity of university payroll Primary project strategy: maintain schedule at all cost Accepting high error rate, with plan to fix over time

American LaFrance:Custom emergency equipment

ALF blames IBM for bankruptcy

Cost: Unknown, but IBM listed as $5.5M creditor Goal: Outsource ERP to IBM (financials, inventory, etc.) Background: ALF spun out of Freightliner Failure: Software problems interfere with inventory

tracking and other issues, causing late deliveries, customer service issues, and quality control

Result: Bankruptcy filing Causes: ALF distracted by deteriorating relationship with Freightliner, problems

with constructing new facility, and economic downturn Poor project planning and oversight by IBM

[W]hen you’re marching through hell,just keep marching.

Charles BurbridgeLAUSD’s CFO(LA Times, 3/19/07)

LAUSD payroll broken: teachers suffer

http://blogs.zdnet.com/projectfailures/?p=130http://blogs.zdnet.com/projectfailures/?p=436http://blogs.zdnet.com/projectfailures/?p=576

Budget: $95M; Expected: $135M System integrator: Deloitte Consulting Software vendor: SAP Goal: Replace payroll system Failure: Teachers not paid Causes: University payroll is inherently complex Roll out and testing were likely flawed (Union: system not

run in parallel) Complicated work rules Deloitte did not press LAUSD for complete information SAP did not want to interfere with Deloitte’s account

Interlocking and conflicting agendas Customer System integrator (consultants) Technology vendor

Confused buyers Silos and internal conflicts

Wacky system integrators Customer success vs. consulting revenue

Schizophrenic software vendors Loyalties split between customers and integrators

Devil’s Triangle relationshipsConflicts of interest are embedded in the structure of the industry (customer gets fleeced)

Oak Park Angst

Oak Park, IL: Complete abandonment

http://blogs.zdnet.com/projectfailures/?p=1304 http://blogs.zdnet.com/projectfailures/?p=1358

Cost: $2M Time frame: complete abandonment after 5-year project Software vendor: PeopleSoft Project goal: Replace payroll and financials Failure: Accounting and finance errors, such as vendors

paid twice Causes: Lack of Oak Park sophistication regarding enterprise software

process, scope, costs over time, management, and so on Low-skill finance employees, lacking basic computer skills, did not

enter data into system Insufficient change management and user training

Project Ocean: Philadelphia’s biggest and most complex IT system.

Kumar KishinchandFormer City Water Commissioner (Computer World, 8/10/06)

Project Ocean: IT overrules experts

Budget: $9M; Actual: $18M Schedule plan: 1.5 yrs; Actual: 3+ years Software vendor: Oracle Failure: Late, over-budget project Causes: Water billing is complex: off the shelf software requires customization Oracle inexperienced: selected by IT department Project manager / executive sponsor turnover Finance dep’t in charge; Water dep’t was customer Politics and empire-building Separately: consultant billing irregularities

Alignment mismatches drive poor decisions

Information silos IT / lines of business Internal / external groups

Distortions: poor judgment, politics,and personal agendas

Extreme case: “Successful” process / failed outcome

Poor communication, agendas, and different measures of success create alignment gaps:

Managementpressure

and the IT divide

J.Crew: Management overrules IT?

Cost: $3M plus lost sales and dissatisfied customers Failure: Impaired ability to capture, process, ship, and

service orders Causes: Aggressive internal planning and schedule Insufficient testing of new system before replacing old Management accepted responsibility Plausible scenario: management pressured IT to accept aggressive

schedule

Industry analyst / vendorpay to play game

Subtle, insidious, and real

Solving the problem

Sweeping changes are needed Detect weak signals

Early warning systems Locate problems, amplify message, and communicate to management

Create feedback loops Increase management awareness Create a culture of continuous improvement Management must listen and act

Distortions interfere with success Denial is the handmaiden of failure Political agendas push against success Poor judgment is endemic in failure situations

Industry structure contributes to repeated failure Devil’s Triangle Analyst conflicts

Detect weak signalsWork across departments to leverage the collective intelligence and experience of all stakeholders.

Avoid bias Remove emotion and political pressures Create organizational consensus and enhance

collaboration

Facilitate consensus across silosUse non-threatening techniques to:

Identify vulnerability hotspots

Pinpoint top management priorities

IT department view:Business case haslow vulnerability

Executive management view:Business case has

high vulnerability

Reveal mismatched expectations

Identify critics / championsAnalyze differences in stakeholder opinion acrossthe organization, helping management target areas needing communication, training, and support.

Critic Champion

Deliver comprehensive reporting

Identify critical health indicators Highlight specific vulnerabilities Target immediate and actionable next steps

Suitable for Board, management, staff, and partners:

Trusted, objective advisor Independent authority on IT success Absolutely vendor-neutral

For more information contact:Michael Krigsman, CEOEmail: mkrigsman@asuret.comWeb: http://asuret.comBlog: http://blogs.zdnet.com/projectfailures+ 1 (617) 905-5950

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