IT Failure and Waste

Michael Krigsman
Asuret, Inc.
IT waste:
617-905-5950
mkrigsman@asuret.com A world-class problem
© Copyright 2009 Asuret Inc. All rights reserved.

Failure is common:
30-70% of projects are
late, over-budget, or
don’t meet plan.


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

*silly wild-ass guess
http://blogs.zdnet.com/projectfailures/?p=6142


Many of us
ignore the warning signs


So What?
“That’s the IT Department’s
problem, not mine.”


Nightmare
S c e na rio
Levis can’t fill orders
for one week = 98%
decline in quarterly
profits

© Copyright 2009 Asuret Inc. All rights reserved. Image © LS&CO

Understanding failure


Business vulnerabilities, not technology,
cause the problems
Project
Management
Executive Change
Sponsorship Management

Stakeholder Third-Party
Involvement Relationships

IT
Business
Case Project Resource
Availability
Success


Managing pain was part of the plan.
Adrian Sannier
University 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 Burbridge
LAUSD’s CFO
(LA Times, 3/19/07)


LAUSD payroll broken: teachers suffer
 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

http://blogs.zdnet.com/projectfailures/?p=576 © Copyright 2009 Asuret Inc. All rights reserved.

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


Oak Park Angst


Oak Park, IL: Complete abandonment
 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 Kishinchand
Former 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
Poor communication, agendas, and different measures of
success create alignment gaps:

 Information silos
 IT / lines of business
 Internal / external groups
 Distortions: poor judgment, politics,
and personal agendas
 Extreme case: “Successful” process / failed outcome


Management
pressure
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 /
vendor
pay to play game
Subtle, insidious, and real


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 signals
Work across departments to leverage the collective
intelligence and experience of all stakeholders.


Facilitate consensus across silos
Use non-threatening techniques to:

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


Identify vulnerability hotspots


Pinpoint top management priorities


Reveal mismatched expectations

Executive management view:
Business case has
high vulnerability

IT department view:
Business case has
low vulnerability


Identify critics / champions
Analyze differences in stakeholder opinion across
the organization, helping management target areas
needing communication, training, and support.

Participant 10

Participant 11

Participant 12
Participant 1

Participant 2

Participant 3

Participant 4

Participant 5

Participant 6

Participant 7

Participant 8

Participant 9
Critic Champion


Deliver comprehensive reporting
Suitable for Board, management, staff, and partners:
 Identify critical health indicators
 Highlight specific vulnerabilities
 Target immediate and actionable next steps


Trusted, objective advisor
 Independent authority on IT success
 Absolutely vendor-neutral
For more information contact:
Michael Krigsman, CEO
Email: mkrigsman@asuret.com
Web: http://asuret.com
Blog: http://blogs.zdnet.com/projectfailures
+ 1 (617) 905-5950


IT Failure and Waste

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IT Failure and Waste