6 Essential Factors: How to Ensure the Success of Large-Scale IT Projects

In the fall of 2013, the launch failure of the Affordable Care Act’s online registration portal, Healthcare.gov, made headlines - as tens of thousands were frustrated in their attempts to register for healthcare insurance. The site simply couldn’t handle that many registrants at once. What wasn’t part of the media coverage, both then and since, is the fact that, for federal government contractors, IT failures of this size are par for the course, and have been for quite some time.  

     In 2008, the Government Accountability Office (GAO) conducted a study which found that an approximate 413 IT projects costing the government $25.2 billion were “poorly planned,” or “poorly performing,” or both. So why does this ongoing avalanche of catastrophic failure occur?

     There are official reasons, of course, but some observers identify the real cause as those issues which face any government undertaking:  pockets of capable people hampered by layers of ineffective and inefficient bureaucracy, as well as “straw” staffing, political appointees with no real expertise. But aren’t large corporations (which do not have to contend with stale bureaucracies, political cronyism, and the distribution of political favors) in a different position?  The statistics speak for themselves.

     Large corporations’ failures with large IT projects are - if not stemming from precisely the same issues - still failures in kind. By far the largest overarching mistake that corporations make is the tendency to view their transformational projects as belonging entirely beneath IT’s umbrella. As a result, they fail to accord these projects whole-business importance, and thus they lack active top-level business support and commitment, as well as a clearly defined economic business case. Aligning the organization’s economic or financial goals with the project’s contributions toward those goals, inside a “living” business case, helps overcome a variety of “speed bumps” during what can be a two- to four-year journey.  When approached from an economic point of view, it’s possible to identify the benefits of a large transformation program sooner, thus helping to both justify and fund the future costs of delivering larger benefits  requiring more time and effort.

     When these missteps are combined with a handful of others, it’s no longer a mystery why costly failures are so common. A study conducted with Oxford University found that large IT projects run 45% over budget 7% of the time, while producing only 56% of the predicted value.
     What’s quite a bit worse is the phenomenon of extreme cost overruns known as “black swans.” According to the Harvard Business Review, research that examined 1,471 large-scale IT projects found that one in six had a cost overrun of 200%, and a schedule overrun of 70%.  When Levi Strauss, for instance, decided to migrate to a single SAP system, allocating a budget of $5 million, things went so badly that the company suffered a $200 million loss. While Levi Strauss survived, the Harvard Business Review notes that mismanaged IT projects have not only cost the jobs of top level managers, they’ve actually sunk corporations, and threatened cities and even nations.
     Here are the 6 essential factors to better ensure the success of your large-scale IT Projects:


6 Essential Factors:

The Project Needs to be a Top Priority.  A project that affects the way your entire company is run must be a top priority for your business, not just a top priority for IT. Everyone needs to be on board -- and stay committed, until the project is successfully completed. That’s because a major IT initiative involves far more than technical skills and tasks. When the IT infrastructure that supports your company is about to change, educating and managing people is equally if not more important -- and as complex -- as installing and implementing new software.

     Those in charge of this degree of change should be your best business-side managers – those with excellent people skills, and an understanding of both the corporate culture and the new technology (or have a good relationship with trustworthy advisors, as well as your own IT department).
     All too often, the business side wrongly misinterprets their role in an IT project of this magnitude.   And, just as often,  IT leadership fails to communicate or engage with the business correctly.  It’s true that the business side  is usually involved up front, helping to choose the software, articulate requirements, and/or  define the business case.  Unfortunately,  when   this “honeymoon phase” is over,   business leadership tends to drift away,  viewing the project  as “owned” by IT. As a result,  these leaders don’t  see  the transformation  project as a top priority,  so they immediately re-focus their attention on  other priorities.  But when  business leadership isn’t actively involved, and  leave it to IT to manage both human and technological resources (something they are in no position to do), the project not only isn’t going to get done, it can easily result in a sinkhole of financial loss.

Here, then, are some common scenarios to avoid:

  • Priorities – competing or conflicting - that prevent the effective and efficient allocation of resources
  • A lack of communication, enterprise-wide, about the importance of the project, and the need to make it a priority
  • A lack of full alignment and support for the project within IT
  • A failure to balance the priorities of this project with stakeholder goals, customer needs, and business value

Your Best People Are Dedicated to the Program.  As we saw in the first essential factor above, the people element in large-scale IT projects is just as important as the technology, if not more so. To succeed, it’s wise to dedicate your best people from core business units to this initiative, to ensure that everyone in your company will accept their decisions regarding project implementation, and that the project will be handled with a high degree of efficiency and skill.

     For transformational initiatives, organizations should use the program as a way to prepare the future leaders of the company.  By seeding the program with the high performing individuals, you not only better ensure success of the program, but you allow those future leaders an opportunity to shape the company.

The benefits of doing so include:

  • The existence of strong organizational ties that strengthen both project management and change management methodologies
  • The early identification of roadblocks and obstacles
  • A pre-existing and well-established relationship with business and the customer base

Your Compelling Business Case Justifies the Investment.  Before launching a project of this size, you might expect that developing a compelling business case, one delineating expected value and expected cost, is a given, a no-brainer. Unfortunately, in many cases, no business case is ever developed. As a result, the project lacks the built-in methodology for driving decisions about design, cost, and functionality tradeoffs that a business case can provide. Knowing your expected value and cost helps justify investment in the project, and so is essential to its continued progress and completion.

The benefits of doing so include:

  • A clear alignment between the organization’s economic goals and the project’s contribution toward those goals
  • Vital trust in the program, because of executive vision and expected benefits
  • A clear framework for decisions and directives, and a project that can be managed rather than coordinated

Your Executives Provide Unwavering Commitment and Support.  Large-scale transformational IT projects require the active commitment and support of top executives for a period of two to four years, in order to be successful. Too often, though, when a project is only partially completed, the senior executives lose focus and begin to think about moving resources to another initiative that seems promising. This is one of the most common ways to ensure the failure of your IT project. Seeing the initiative through to completion with full commitment and support is the only path to success.

Here are some additional benefits:

  • Alignment with the program’s vision and intended value by both executives and business constituents
  • Eliminating roadblocks for the program sponsor and the program management team
  • A pre-existing and well-established relationship with business and the customer base

Your Decision Making Is Top-Down, Center Led, & Swift.  To provide a transformational IT project with the robust governance framework it needs from start to finish, the members of your business and technology program management team should operate with clearly defined roles and responsibilities. Decisions should come from those whose roles are at the top, be led by those who occupy the center positions, and be executed swiftly by everyone.

     At the same time, and before the project begins, another governance framework should be developed that will handle the inevitable project changes – from cost increases, to schedule alterations, to scope creep. “Guard rails” should be put in place, so that, if a cost increase or a schedule change exceeds a certain threshold, a designated top decision-maker will become involved - although not before.
     Finally, the project management team should meet with all stakeholders on a regular basis, in order to communicate project progress, and be sure that the goals of all involved are in alignment with the project’s direction and scope -- as it develops and evolves.

Additional benefits of a clear decision-making framework:

  • Project controls will be adhered to, with designated roles and responsibilities for all involved resources
  • There will be an issue escalation planning strategy that encompasses:  meeting cadence and frequency; stakeholder identification and delegation; and scope-relevant guard rails and decision trees

You have Independent Controls and Transparency.  Finally, you will need skilled experts for fire prevention and potential fire fighting who can course-correct processes quickly, if needed, and can fill-in any expertise gaps within the organization, all while providing an objective view that makes success far more likely. 

     At the same time, you want to ensure that communication between business and IT is both constant and transparent. Miscommunication, or no communication, can compromise an initiative of this size all too easily.

Additional benefits of a clear decision-making framework:

  • Impartial expert counsel for the immediate project, as opposed to post-implementation course correction or add-on services
  • Prohibits any conflict of interest - both within the organization and with the implementation/integration partner

Liberty Tips the Scale in your Favor

     It may seem like semantics, but  there’s a considerable difference between hiring an IT consulting company to implement your large IT solution, and bringing on Liberty  as an independent advisor, a partner that is truly aligned with the outcome.

     Our extensive experience in designing and delivering complex programs, as well as other critical business initiatives, affords us a unique perspective. We offer project oversight, engaging in management responsibilities along with you, our client.

     Each of our successful program case studies share many of the same outcomes:  a reduction in business risk while maximizing business value, and an overall business and IT alignment with your long-term goals.
     We have course-corrected dozens of projects in dire situations, and have gained a lot of insight about the potential and actual pitfalls of large-scale program initiatives.  

     So if you’re considering a large program initiative, or are already engaged in one, and you need expert guidance, please reach out to us at info@LibertyAdvisorGroup.com. We’d be happy to get you started in the right direction or back on track to better ensure large-scale program success.