Enormous IT implementation is a high-stakes game. The capability for positive business results are huge, but so are the downside risks. System costs alone can run into the tens of millions, but this is often dwarfed by the cost of disruptions to the organization and its clients when things go badly, easily running into the hundreds of millions. While the numbers for smaller companies and smaller projects may be less, it is still more the rule than the exception less, it’s still more the the rule than the professionals involved hang in the balance when they take on major IT implementations.
Sadly, less than one third of all such projects manage to meet expectations. While not widely known, this dismal success rate has been constant for decades. What’s the reason for this? Well, in order to be successful, project leaders must tackle 3 important areas of risk that could possibly threaten any IT implementation. While most are able to manage one or two risk factors successfully, very few are able to deal all three; and if one factor is at all neglected, the potential business results of the project are on the line as well.
What are the risk factors?
1. Technical Risk
In layman’s terms, technical risk is associated with getting the machines and software to run the way they should. Will the system work? These are considered technical risks. Achieving technical success is a daunting challenge. Deadlines and budgets often take a beating, but as complicated and time-consuming as this can be, most installed systems ultimately function pretty much as they were expected to. Even if it takes sheer effort technical success is achieved in most cases.
2. Business Risk
New system features and better performance create the potential for business results; they don’t create them automatically. Just because a new system allows better data access does not mean the company will necessarily realize labor or material savings. To create real business value, planners must first select system features that create opportunities for improved efficiencies. Second, they must make the business changes needed to turn those opportunities into reality – things like process redesign and resource reductions. Projects fail to create real business value when the steps needed to translate system features into improved business performanceare not made explicit or when management is unwilling to follow through in executing the steps that are needed.
3. Organizational Risk
Just because a new system is put in place does not mean that the people in the organization will use them. It is not uncommon for people refuse to use them at all without suffering any consequences. This situation can occur because of employee resistance to change, a failure to communication, new work procedures, and unwillingness to enforce new expectations, or any number of other causes. Such issues are addressed as part of an Organizational Change Management Plan. This is an area that is commonly neglected, so many project failures can be traced to organizational risk. A major source of confusion is user training. Project leaders often believe user training is about learning new software features. Actually, this technical training addresses technical risk, not organizational risk. Changing behaviors takes more than that. Technical training rarely covers performance management issues or achieves eradication of legacy procedures, and employees are often left to figure out exactly how to integrate the use of a new system into their job functions. An effective Change Management Plan would address all of these issues.
For more information, please see our website: business IT alignment
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This post was written by admin on May 10, 2009
