Google the question “what percentage of IT projects fail?” and you’ll see results from various studies that range from 50 to 68 percent. While we can argue about the survey criteria and methodologies used, let’s agree that the failure rate is relatively high. High enough, at least, that you should be concerned if you’re the healthcare COO in charge of complying with ICD-10 mandates, or a utility CIO implementing Enterprise Work and Asset Management, or a bank CIO who needs to align finance systems with the latest Know Your Customer guidelines.
Here are the ISG Top 5 keys to successfully managing a large IT project.
1. Define clear and measurable business outcomes in a specific timeframe. The goal of the project isn’t “go live” implementation, it’s helping the business. As such, be sure to articulate and quantify how the project – and the resources invested in the project – will help the business succeed. Timeboxes and deadlines are imperative to ensure commitment to goals and priorities. A common mistake executives make when developing a business case is to set vague and squishy goals to protect themselves in case results don’t pan out. In fact, setting the bar low often becomes a self-fulfilling prophecy. A well-articulated business outcome is specific, measurable and demonstrably valuable to the business.
2. Make the difficult choices early. Define operating principles at the outset of the project. Decide early to buy versus build or agree that speed should trump cost. This will prevent contentious and time-consuming debate further down the road. Ensure that the operating principles are relevant and meaningful – don’t fall back on bromides like “quality comes first.” Acknowledge that the project won’t give everyone everything they want. Resist the temptation to avoid or defer conflict; a willingness to say “yes” to everyone can fuel unrealistic expectations and may ultimately backfire.
3. Leverage provider expertise. Implementing a large-scale IT project is a complex undertaking that doesn’t necessarily have one right answer. A traditional, highly prescriptive RFP may, therefore, be inappropriate. A more open-ended Request for Solution (RFS) facilitates dialogue and collaboration, encourages innovation from providers and allows you to evaluate alternative approaches. Rather than spelling out specific requirements, the RFS model asks, “How would you solve this problem?” Chances are the provider community has more experience than your team at any one of these complex initiatives. Let them use the lessons they’ve learned to de-risk your program.
4. Ensure competitiveness and commercial transparency. “Large project” and “on-budget” don’t have to contradict one another. ISG always advises clients to run a thorough, competitive and transparent selection process to ensure that all parties understand and buy into performance objectives. Don’t assume that only one or two providers are qualified for a certain type of work. Evaluate proposals and pricing based on market standards. You will get relatively little leverage once you select the provider(s) and begin the program. Switching costs are prohibitive and the political fallout can be career-limiting.
5. Integrate the provider team. A large-scale program, almost by definition, involves multiple providers. While the multi-sourcing model offers significant benefits, it also presents a challenge, namely: how to hold all providers on the team accountable and keep them working together on your behalf. Effective service integration requires setting expectations for collaboration early on by writing specific collaboration requirements into contracts and implementing the proper process and management discipline before issues arise. Aligning objectives is one of the most difficult things to do when leveraging multiple providers—but aligned they must be! The consequences of not integrating services in a complex program are the exact ones that are likely to land companies and their executives in that unfortunate majority of failed larger-change programs.
ISG has helped many companies through successful, large-scale IT projects. Contact Esteban Herrera to discuss further.About the author
Through his involvement in hundreds of global outsourcing initiatives, Esteban has developed unique insight and the ability to ask the right questions to set an organization on the correct transformation path. He advises organizations on issues of digital transformation and global service delivery, leveraging his deep understanding of business strategy to help align their initiatives with their vision. Esteban brings international experience to his clients, having lived and worked on four continents, and a passion for the opportunities of globalization and specialization in the industry. He leads ISG’s Energy, Life Sciences and Healthcare practice, as well as the Latin America region and is the author of the CIO.com blog Informed Outsourcing.