IT Projects and “Too Big to Fail”

We hear the complaint all the time:  “Too many IT projects fail!”

What follows are typical discussions and  methods to ensure that  proper project management and controls are introduced to lower the likelihood of failures. Most of the time, failure in IT is seen as a problem that must be eliminated.

It’s true that when IT projects fail, money, time, and,  in many cases,  reputations, are lost. However, the reality is that IT is a rapidly changing field, with many diverse solutions for every potential business need.   Is it surprising that perfect project management cannot compensate for the fact that even the best IT managers don’t have perfect knowledge of the IT landscape they are working in?

It’s time to think differently about projects in IT and our relationship to the concept of “project failure.”  While failed IT efforts should never be a desired goal – we should start to accept them as a part of doing business and change the way we deal with this fact in three critical ways.

I.  Never initiate an IT project that is “too big to fail”.

The phrase “too big to fail” became commonplace with the recent financial meltdown. The country was introduced  to  systems (banks and insurance companies) that were so critical, their failure needed to be prevented at all costs. That cost – as we know – tends to be much higher than the value those systems tend to provide us.

Much like a wise investor never puts his entire balance sheet in one stock, an IT manager should never “bet the farm” on a specific, singular strategic IT investment.  Game-changing IT services must grow naturally out of a host of smaller projects and a well-managed portfolio of IT “bets”.  In a world of imperfect knowledge and relentless sales hype, this is the only way we can find the best solutions within acceptable risk parameters.

Recovering from a “too big to fail” IT project is difficult – but not impossible. At Ortman Consulting, when we encounter “big bets” in IT gone awry, it is often in the form of problem projects that are years late, over budget by several orders of magnitude, and staffed with a demoralized team. Our critical project recovery work in the past shows that the best way to recover is to work first with a small set of key stakeholders to break apart the project into smaller components.. Components should be as independent as possible. This is disruptive, but necessary, in order to find what parts can go on to succeed and what elements need to be replaced or delayed until a later point in time.

Big IT bets pay off in some cases – and are all the rage of glossy magazines and vendor brochures.  But there are better ways to increase the effectiveness of your IT services without taking unneeded and irresponsible risks.

II.  Define smaller projects within a strategic portfolio framework.

An approach of taking smaller IT “bets” across a range of solutions may sound complicated and wasteful – but if a proper strategic framework for managing those bets is set up, it becomes the most efficient and effective means for introducing new IT capabilities in the business.

The framework should include key goals such as a how external services like user applications and support will be enhanced from a strategic perspective. In addition, internal infrastructure such as networks, services sourcing, and data management should include a strategic set of goals. Service owners in charge of these systems and components should be free to introduce small enhancements, replacements or introductions of services that could eventually reach the goals outlined. Lastly, management and service owners should agree on entry and exit stage gates where the portfolio of IT projects is reviewed and assessed. Well defined, all-encompassing, and open systems for evaluating project performance must be in place. Efforts that do not pan out should have a well-defined “kill” or “loss” threshold and stopped so that new and successful projects can be funded. Lessons learned from the projects should be part of the process of shutting down each project.

Ortman Consulting has instituted portfolio management systems for IT departments with government and commercial clients.  Our basic starting framework can be tailored and customized to meet unique organizational constructs and IT maturity levels.  In addition, technologies like virtualization make it much easier to build up and break down IT environments and these technologies, along with outsourced (cloud) services are part of Ortman Consulting’s approach to instituting smart and flexible IT portfolio management.

III.  Encourage an open and learning attitude towards IT failure rather than strive to eliminate it.

Shift your organization’s IT service culture away from hiding or discouraging failure to one that allows people to take risks in a defined framework and learn from the results of their projects.  Information technology changes quickly – so rapid learning and innovation are essential to ensure staff stay sharp, motivated, and are well utilized and able to produce and support IT services for the business.

Management and customers “up the chain” must also be informed about the value of rapid, small innovations and IT projects.  At Ortman Consulting, we find this often proves to be less of a challenge than anticipated.  Younger and IT savvy employees and customers may enjoy the opportunity to test and evaluate new (“beta”) products – and even those less comfortable with computing technology can understand the value of incremental changes rather than large, potentially disruptive ones.