Dobay1

MIS-ICT Projects: Reasons of Failure With Enforcing Change

Int. Conf. On Change Management, PTE KTK– Ohio University, pp. 63-73

 

Dr. Peter Dobay
Department of Business Informatics

University of Pécs, Hungary

 

Abstract

 

American companies have started about 200,000 ICT & application software projects before Y2K. This number is about 300,000 now annually, according to the CHAOS Report of the Standish Goup. As nearly all ICT projects have a large impact on the organization, the information system, and, finally, all employee, the rate of failure – estimated around 23% by the researchers, with 48% “challenged”!  – is probably showing the lack of proper change management performance in this field.

It seems: even if many ICT project technologies use basic change management models, the „technology driven” attitude is overwhelming the general management rules.

One can search reasons of this failure rate (and the lost hundred millions of dollars), but everyday practice says, there is a lot to do to train managers, to enhance (and: apply!) methodologies.

The lecture formulates some questions for project managers on this field:

• Is it true, that fast (rapid) ICT projects are more successful – if yes, why?
• Who can lead an ICT project: an ICT expert, or a proven change manager?
• What is the real impact of the corporate “information maturity stage”,
  an info-cultural company background?

Also we deal with the role of the Chief Information Officer, as – evidently – a responsible person to manage ICT-based change projects.

 

Introduction: the ICT Industry

 

Researchers from the 70’s are using terms „Information Economy” [Yonai Masuda], „Knowledge Industry” [Davenport], „Internet Economy”, „Networked Economy” [Castells] and they also mention „e-” („electronic”, „digital”) as a wildcard for „something, which is supported by ICT, computerized, or networked”. All of their definitions and arguments are emphasizing: this industry today is made up of companies directly generating all or some part of their revenues from Internet or Internet-related changes, products and services ([Hammer]). The first „layer” consists of companies giving the hardware and the Internet infrastructure. Members of the second group build basic „knowledge based” services, i.e. softwares, prodcedures, applications over this infrastructure. The third layer utilizes information- and knowledge management tools to transfer content, like education, media, entertainment, and the entire e-Commerce industry, using these ICT tools as a new marketing channel – even if they have traditional brands and businesses (click & mortar), or emerged just ont he base of this new technology (click & buy, dot-coms). This group is covering nearly all of us, players on world economy scene: no one can remain intact of ICT applications and challenges related to it.

The last layer is forming now – according to Masuda – the „industry of ethics”. Organizations are using the technology not only to gain profit, to sell more or get closer to suppliers: they talk to you telling truth about proper life. Business or not, Web sites on religions, hobby clubs, medical curing, lifestyle and philosophy, mobile phone „political messages” and other solutions finish the cathedral of the ICT technology-driven, information-based human society.

 

Companies can not remain intact of this rush and all ICT-based project lead to a remarkable change in organisation, in leadership, and, of course, in human relations.

 

 

The Problem: Nature of ICT/MIS Change

 

An information system project has normally four problem areas, shown on Exhibit 1.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 1.: Problam areas of change in an information system (Johnson, 1996)

 

Consultants take first the design phase into account: there are numerous methodologies to support requirement analysis, create a proper feasibility study, interview managers and endusers, designing change. Hammer and Champy ([Hammer]) even focused on information technology as "an essential enabler" for business process re-engineering. System operations have to be changed parallel with new ICT architecture – people mix causes and consequencies claiming on „computing”. Data management  forms always the real base of all ICT systems: if anything, this has to be changed with new aims, not to mention data conversion need from legacy systems. Cost management  comes together today with information management: cost/benefit models e.g. from [Bensaou] play internal role in ICT feasibilty studies.

 

One can see how complicated project have to be run over companies, where the lack of ICT knowledge even enforces the resistance against any change! Consulting companies of course investigate reasons of failure and publish large regression models introducing factors reponsible for doubled project period, tripled costs, insufficient services, etc. The CACM Report on „Better Cost Estimating”[1] showed some data (see Exhibit 2.), which have been reinforced many times since then: mis-understanding of parties involved, improper or non-use of methodologies couse failures.

 

 

 

Data of a survey from 115 large companies project managers (USA, 1992):
       66% of ICT projects have overrun costs substantially”
 

Respondents underpinned:  

„Preliminary cost estimate is essential”             84%

„We do it very well”                                              44%

Problems mentioned and ranked from 1 (No problem) to 4 (Large problem):
    1. Partners always change requirements                       3.9
    2. Careless development is missing                                3.6
    3. „They do not know, what they want”                                      3.6
   4. Weak communication of parties                                3.3
    5. False problem-definition from the beginning          3.3

 

       Exhibit 2.: Causes of failure on ICT Changes (CACM, 1992)

 

A more up-to-date report is coming from the Standish Group[2]. They survey thousands of ICT projects with the similar criteria in every five year to explore trends in success and failure. The Standish criteria for a “project” is minimum 6 months of project period and minimum of 6 experts involved. With these criteria they found about 200,000 ICT projects in the US before Y2K, and the last 2003 survey worked with about 300,000 – rapidly growing number.

 

 

The Standish CHAOS ’99 Report on ICT Project in the US:
 

        23% failed,    49% challenged,    28% successful.
 

137,00 late & overbudgeted, 65,000 failed.
 

Changes from CHAOS ’94:
 

   - Time overruns value decreased from 222% to 64%
   - Cost overruns decreased from 189% to 45%
   - Meeting „success” criteria: from 14% to 23% by Y2K
 

 

Exhibit 3.: Parts from the CHAOS Report
(The Standish Group, http://www.standishgroup.com)

 

The Standish surveys showed a significant development in five years: less time overruns, less cost overruns, and more projects could fulfill the Standish criteria of “success change”.

However, the success is only 23%, and 49% is characterized by the researchers as “challenged”. That is, in the ICT world, the hardware and software investments are finished, ICT systems are audited and working, but business aims – real organizational change, re-desig of processes, better services, etc. - are not achieved!

 

Researchers found some arguments from regression analysis on development. These are like

 

• The average cost of ICT projects has been cut to half in 5 years

This means, managers have learnt form former failures and design “limited change”,
      reducing risk level. Also with lower budget a smaller project can be managed with
      more success.

• Better development tools were used to monitor & control the projects.
  Well, in 5 years, project supporting (even computer-aided) technologies have developed a lot and are easy to access (similar platforms, lower prices, etc.).
  Controlling costs of an ICT system is in the frontline of information management research and many publications offer models from planning and post-mortem audit.
• More experienced (skilled) project managers lead the teams.
  We believe, higher education and professional trainings achieve to have these new managers. The ICT field have lost legion of consultants when nearly all mainframe-based systems wen out of fashion. Company managers cried for specialists of client-server systems, LAN specialists, web-business experts – and they were not available. Charlatans have covered the market with weak, incidental knowledge and short experience for more, then a decade – education systems even today can not cope with demands on this field.

 

 

Reasons explained for ICT/MIS projects’ success & failure

 

As ICT systems are rather complicated, consisting of hardware – software and orgware elements, this has to be defined somehow what we mean on „ system failure”?

According to my former experience the contracting party appoints a project / a system a failure on cases below:
 

• Information system does not perform as expected
     - response times are long, database access is slow, outputs prepared are delaying
• The system is not operational at a specified time
     - as more systems have to run on a 24/365 basis, the system continuity is essential
• Poor design makes inconveniences
     - more services are needed but is causes programming costs and time delays
• Inaccurate data occurs
     - a very brutal case when a system has data errors, caused by improper algorithms
• Excessive expenditure occurs (TCO)
     - frequently the ICT hardware architecture is underplanned, a bad requirement
      planning leaves necessary functions undone, more professional staff needed,etc.

 

As projects are normally lead by outside contracted consultant (or in many cases: more consulting teams!), this is important to define “project failure”, or simply poor project management cases:

 

• Project shows overruns compared to expected cost ;
• Unexpected time slippage occurs – of weak project management and/or bad feasibility study, or project staff mistakes;
• Technical shortfalls impairing performance – ICT tools even today can cause uncertain performance.

 

Leading an ICT change project is also a challenge. To mention: literature of ICT management I srich in dealing the problem of the CIO, or generally: leadership problems of the IT or IM[3] units and staff. These two things are correlated: this is hard to start a project with success expectations, when the company IT staff and its leadership seems weak.

 

Improper management normally leads to:

 

• Cost overruns
• Lack of controlling and audit
• Failure to obtain anticipated benefits

 

As corporate cultural background is commonly responsible for change management problems, false beliefs of ICT are normally work againts change. [Laudon] lists some of these as follows:

 

“People want this change: we like IT!” –

suggests, no problems can occur, as our staff is “with us” in all we do.

“Monday morning we’ll turn on the new ICT system & they’ll use it.” -
                        very common belief, believing in power of leadership& work orders.

“A good training program will answer all of their questions & then they’ll love it.” –

            which is not a bad idea, but result depends on entire environment:
                        process data and skills can be transferred, but not motivation, or awareness.

“Our people have been through a lot of ICT change – what’s one more change going
            to matter?” – a belief on 3rd (4th, …) generation projects: true only if former projects

            and systems all have built better knowledge, acceptance level, motivation, etc. -
                        a rare situation according to CHAOS report!

“We see the need for helping our people adjust, but we had to cut something…” –

the most frequently made mistake, with cutting 15% of the project goals, those,
which had had to make work really easier, or to serve the most impacted stakeholder group ( the boss, …), or to make necessary data conversion available, etc.

“They have two choices: they can change or they can leave!” –

a very dangerous and risky attitude in ICT projects: yes, a boss can decide and
dictate, but ICT systems are sophisticated enough to give a chance to endusers to prove: nothing is going well and all parts are unuseful.

 

These “common misbeliefs” on ICT projects lead to risky consequences: to have a chance for success, we would need our team to work as a solid, uniform unit when dealing with ICT project consultants. Missing this, neither the best leader can interfere results like these: 

 

• Change may not occur at all: people learn „ICT changes normally fail”
  - ICT architecture is built, money is spent, bad communication of failure causes and opalic structure of auditing responsibility send a “message”: “These type of projects (or: this computers!) usually have serious problems, mainly fail totally”.
• People will comply for a time & then begin circumventing the change
  - a leadership problem: “The project is over, forget it” – which can only be partly reasoned with numerous troubles which normally occur in ICT projects. The lack of leadership commitment seems essential to grow feelings like this: did the project have a real necessity in the business process, if systems could be neglected so easily?
• Users will accept only a portion of the change – use new systems in an old way
  - probably all ICT systems allow users NOT TO use them properly: performance depends on endusers, systems give only a chance, offer a capacity.
• Benefits of an IT/MIS project are never full realized or after much time & resources expended – mainly large and complex project plans fail on this way: too many targets to aim at, to many functions realized, to many services to learn, too long time to achieve tangible results – it makes overwhelming burden on managers and other endusers to be motivated to utilize all.
• Large & complex ICT projects collapse – a general mistake, bus especially true when information technology is involved: weak project management, uncertain systems to build in, numerous vendors to deal with, lack of expert team leaders, even low level of business ethich of the ICT industry – all can lead large & complex project to collapse.

 

 

Who are these people – leaders, participants of ICT projects?

 

There are some traditional project roles around ICT changes. Some have to play “positive” role (call them sponsors), others only “may support”. They differ in what they are faced with according to a new project: they are impacted differently with new processes and requirements (performance, response time, personal training, etc.) – there are cases when even new rules of success are not clear![4]

A simple category list is given here:

 

Sponsors                     ICT project decision makers, the responsible CEO, CFO, CIO;

Change agents                        ICT project dedicated leader; the outside consultants,

                                   the inside IT/MIS staff;

Targets of Change      IT/MIS endusers, middle management, clerical workers.

 

The CHAOS Report categorizes them as „crusaders” and „tradition bearers”, as opposites. Their role in leading the ICT project to success is ambiguous: sometimes positive, in other cases rather negative. Exhibition 3. shows the roles and effects.

 

 

 

 

 

 

 

 

 

 

	- familiarity of the                    TB+   old system - „it works well” - no training is needed		- faster then the current software     C+ - has expanded funcionality - popular software: easy to find    professional staff
	- slow, bad performance              C- - limited functionality - software is no longer   supported by hw/sw vendor		- will take time to learn                  TB- - too many features & functions - training is needed

 

 

 

 

 

 

 

 

           Keep current ICT                                   Upgrade to a different ICT                           or ERP system, software                           or ERP system, software

               NO CHANGE                                                DO CHANGE

 

Exhibit 3.: Change decision participants (crusaders and tradition-bearers)
 with different impact on success
(source: The Standish Group CHAOS Report, ibid.)

 

As in all change situations, we could list necessary requirements for those leaders, who are dedicated to manage or lead ICT change. [Owens] lists requirements as below, surveying 12 large firms, initiators of hundreds of projects:

 

• senior executives view information culture as a critical step towards
  continued success;
• top managers' commitment to information as an asset in the implementation of IS;
• the role of the traditional information specialist is being overshadowed
  by IT (hw+sw) personnel;
• a new set of attributes are to set, that information professionals need to survive
  (including political ability; business acumen; skills in ICT, innovation, and negotiation).

 

One can collect recommended competencies for information specialists, as effective change agents (see Exhibit 4.), but do not forget: this is easy to construct lists, but more hard to find people to match majority of requirements.

 

 

Professional competencies   Expert knowledge of inf. resources Has specialized subject knowledge Develops and manages services         Provides instruction and support Assesses information needs   Uses appropriate ICT tools Uses appropriate management Develops special information                 products Evaluates the outcomes of                 information use Improves information services           Effective member of the team           Personal competencies   Committed to excellence Seeks challenges &                                                    opportunities Sees the big picture Looks for partnerships Serves mutual respect and trust Effective communication Works well with networking Provides leadership Focuses on what is critical Committed to lifelong learning Has personal business knowledge        and skills

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Exhibit 4.: Recommended competencies of an „ICT change agent”

 

„Be multi-lingual, be a gatekeeper of the project, be a cattle-driver, be a maestro of the change” – a real challenge for HR staff.

 

Recommendations for ICT Projects

 

Summarizing practice and literature, some recommendations can be listed. As a minimum, experts say a fast (rapid) ICT project is more succesful: a lot of parameters are easier to handle if a project time period is short.

 

Also I believe in Nolan’s „stage theory” impact (see e.g. in [Dobay]): a company forcing an ICT project in an improper environment will surely have a failure. Nolan cascaded ICT development of a firm to four stages (Initiation, Contagion/Expansion, Integration/ Formalisation, and Maturity): the theory says miracles can not be achieved. A project has to  „fit” into the maturity stage, otherwise management spend much more or much less for an investment: both has to be evaluated as a failure.

 

A checklist can be constructed too:

 

• Devote strategic interest to ICT – do not take it as „infrastructure” project
• Know the industry „best ICT practices”
• According to above, how much do you spend?
• Do you believe in your own ICT cost data?
• Count on ICT risks, when change is significant
• Count on quality management
• Do not believe in university diplomas: have special upgrading courses, training seminars, workshops and eLearning/ Intranet.

 

Consulting firms also describe their need of people to run successful ICT projects. They mention necessary knowledge on C/S systems audit; LAN/WAN auditing; Internet security, e-commerce & payment systems; risk management in IT technologies; EDI, ATM, mobile technologies; CASE tools – all are hard challenges to higher and professional education.
 

Call again the Standish CHAOS Report: as a consequence they recommend some to-do-s for better change management in the ICT field (percentage of respondents given):

 

1. Executive Support                             18%
2. User Involvement                              16%
3. Experienced Project Manager           14%
4. Clear Business Objectives                 12%
5. Minimized Scope (scope is time!)     10%
6. Standard Software Infrastructure       8%
7. Firm Clear Basic Requirements          6%
8. Formal ICT Methodology                   6%
      (46% of success projects used one!)
9. Reliable Cost Estimates                       5%
10. Others                                                  5%

 

Managerial education, good softwares, robust papers in scientific journals, of course, can have large impact. Really? Assume: the famous Sloan Management Review circulate fewer than 10,000 copies an issue, while there are approximately 15 million managers in the United States… Only we hope: those dealing with project management, change management methods and best practices, will pay more attention, collect relevant local data and recommend processes to have more practical succes in this sensitive and wide-spreading business area.

 

References

 

1. Auer, Dagmar - Dobler, Heinz: Change Management in Software Development, IDMT-2000, Zadov, Czech Republic
2. Bensaou, M. - Earl, Michael: Helyes gondolkodásmód az információtechnológia-menedzsmentben, Harvard Business Manager, 1/2000
3. Boynton, Andrew C., Gerry C. Jacobs, and Robert W. Zmud: Whose responsibility is IT management?  Sloan Mgmt Review. 33 (4):32-38. 1992.
4. Castells, Manuel: The Rise of the Network Society; Blackwell Publishers, 2000
5. Cronin B - Davenport, E.: Elements of Information  Management, NY Scarecrow Press 1991
6. Davenport, Th. H. and Short, James E. (1990) "The New Industrial Engineering: Information Technology and Business Process Redesign," Sloan Management Review, v31, n4 (Summer)
7. Dobay, P: Vállalati információ-menedzsment, Nemzeti Tankönyvkiadó, 1998 
8. Earl, Michael J.:  "The new and the old of business process redesign," Journal of Strategic Information Systems, v3, n1, pp. 5-27., 1994
9. Görög Mihály – Ternyik László: Informatikai projektek vezetése, Kossuth Kiadó, 2001
10. Hammer, Michael and Champy, James: Reengineering the Corporation: A Manifesto for Business Revolution, HarperCollins: New York, NY. 1993
11. Internet Enabled Job Creation. Andersen Consulting, August, 2000.
12. Rob Kling, John Tillquist: Conceiving IT-Enabled Organizational Change
    The Center for Social Informatics, SLIS Indiana University, Bloomington, March 1998
13. Kenneth C. Laudon – Laudon: Management Information Systems, The Networked Enterprise, Prentice Hall, 2002
14. Y. Masuda: Az információs társadalom, OMIKK, Budapest, 1988 
15. I. Owens – T.Wilson: Information and Business Performance: A Study of Information Systems and Services in High Performing Companies, Bowker Saur, 1996
16. Tapscott, Don and Caston, Art. Paradigm Shift: The New Promise of Information Technology. McGraw Hill: San Francisco, CA, 1993.
17. Venkatraman, N. (1994) "IT-enabled business transformation: From automation to business scope redefinition," Sloan Management Review, v35, n2.

 

 

[1] Communications of American Computing Machinery, Editorial Report, 1992. The ACM was established in 1957 (!), time of the computer language Fortran.

[2]  The Standish Group Report, „CHAOS: A Recipe for Success”, 1994, 1999, etc.
 

[3] IT: information technology (hardware installation & maintenance); IM: information management

[4] Think on a simple office case: who can create new performance measures for a new document management system, with totally different working style, new functions, new processes?