The Top 3 Reasons Why Tech Change Portfolios Fail
IT projects are notoriously difficult to manage. In Dec 2020, Forbes reported that for the average IT project, at least one in six turns into a ‘black swan’ with a cost overrun of 200% and a schedule overrun of 70%. In other words, while most IT projects will fall short of their budget targets, a few might overshoot the targets so much as to cause catastrophic organization-wide problems.
In the US, KMart's massive $1.2B failed IT modernization project, for instance, was a big contributor to its bankruptcy. Furthermore, a year ago, Gartner estimated that 60% of big data projects fail. As bad as that sounds, the reality is actually worse.
Infoq Chaos Report estimates this to be a success rate of 18% only for Grand and Large Projects, the type of CTO transformations that blows the budget by multi millions.
1. Executive Sponsorship & Clear Outcomes Based Delivery
Most can recall going to the company wide, or departmental town halls or quarterly updates. During these approx. one hours’ meetings, the exec team provide updates on what they have decided are the key priorities and organisational objectives for the year and quarter ahead etc.
These are typically very high level, and some organisations attempt to link these to the employee’s performance within a HR system. So what it is then that makes many key strategic transformation portfolios still fail to deliver?
There are clearly defined strategic objectives and outcomes; however most often don’t filter down to delivery teams. There are a number of reasons for this:
a) Lack of clear, consistent and regular communication from top; exec team to delivery teams. This is most often caused by middle management who interpret the strategic guidance and translate these often with their own specific and biased lenses. For example a CFO objective of having one platform to calculate risks weighted assets (RWAs) may be different to the CTO’s suite objective of reducing the tech debt or optimising other platforms as we have seen at a client recently
b) This is a misalignment of change objectives; top teams aren’t in full agreement with expectations and objectives around the change
c) This often then also involves failure to set up the correct performance targets; KPI’s and budget. On average, when you set numbers based on an organisation’s full potential, not based on what someone is comfortable with, the numbers end up increasing 2.3 times, which is the result of the company focusing on activities rather than outcomes.
d) The organisation plunges into an activity without adequate preparation. Sometimes, companies will get excited about the “sexy” stuff, such as digital and advanced analytics. But if you don’t have a solid basis of execution and if you haven’t created some of the basic building blocks, you’re building a house on quicksand. We recently saw this at a leading IT vendor who acquired several businesses, but were unable to fully embed them into their execution and scaling up ways of working causing failed implementations and clients to flee.
2. The Delivery Team’s Emotional Maturity
Most project and programme managers are required to have PMI, PM, Agile and various other project frameworks qualification yet none are required to have leadership, change management and EQ skills. With over 70% of projects failing due to lack of basic change management capability, one would think this should be an absolute must PM capability?
These stats unfortunately also include programmes which have change managers as part of the implementation or delivery stakeholder map.
During leadership training, one is taught of the importance of EQ when leading large teams, calmly and clearly being aware of what we don’t know is a sign of a highly effective non-biased leader.
Peculiarly enough what we have typically seen in nearly 20 years’ experience, is that project or programme managers are expected to be directive; any sign of servant leadership, empathy and stakeholder influencing skills being seen as a sign of weakness.
Asserting the command and control approach to delivery sees a PM as the real deal sadly even today despite so many organisations aiming to implement agile delivery, which champions the servant leader.
What we see is the type of programme managers that come heavy-handed, hiring and firing, restructuring the programme delivery as we have recently seen at one of our clients. The programme was restructured on several occasions over a number of years; spending multi-million dollars yet still failing to shift from discovery and analysis phase.
The directive command and control approach doesn’t allow for teamwork, collaboration and problem solving that enables the change management capability for cross-functional teams to work together even when project cadence and governance is present.
We have seen this time and time again internationally and locally where companies spend millions on delivery that doesn’t materialise, followed by organisational restructure that costs millions, then there is a reset and the same pattern over and over again.
3. Change Management & Lack of Agility
It is all about the people. I cannot emphasise this enough and as I was researching for my post today, I found out someone actually already wrote a book about this - Steve Andriole, who writes for Forbes and is an American information technology professional and professor at Villanova University:
It's All about the People: Technology Management That Overcomes Disaffected People, Stupid Processes and Deranged Corporate Cultures by, that focused on the human element in technology. The premise is as correct today as it was then. All of our efforts to avoid technology project failures can be simplified if we focus primarily on the humans who plan, fund and execute technology projects.
The majority of organisations are attempting to address this issue via an Agile transformation, however the issue is that a number of large NZ companies are all trying to implement the Spotify operating model. They are forgetting that Spotify is a single product company, and trying to follow that model for multi-products, with multi-channel organisations are doomed from the start.
Agility simply means prioritising people over processes. It really is that simple. What that means is real engagement and collaboration regardless of whether the team follows a waterfall MS Project plan, a DevOps backlog or a spreadsheet.
Effective change management will not complicate the delivery, in fact on the contrary it should simplify the delivery, especially when managing multiple work streams and projects, resolving issues and mitigating risks, rather than simply reporting and escalating them to Steering Committees.
The current delivery models described above, in our view, are simply not sustainable any longer. We predict organisations will struggle to afford these behaviours and approach of non-delivery in the current post Covid-19 business environment.
Simplifying and being pragmatic, engaging the stakeholders at the right level and adapting the delivery model to the client’s environments is how we do things. Over the years this is how we have differentiated ourselves from the rest, and we have done this successfully thus enabling tech delivery outcomes.