Managing priorities Featured

7:00pm EDT February 28, 2007

It’s no secret that IT projects fail at an alarming rate. Business requirements are changing so fast that project managers who complete a project on time and within budget may still deliver an irrelevant product. Approximately two-thirds of all IT projects come in significantly over budget or late on their timeline. And about half of these projects are deemed outright failures. So what lies behind so many failed IT projects?

“There is certainly not enough up-front quality thinking taking place,” says Bill Russell, executive vice president of Allegient in Indianapolis. “And it’s often due to a lack of alignment between the business side and the IT side within an organization.”

Smart Business spoke with Russell about the high failure rate of IT projects, and how business owners can mitigate and be better prepared for project challenges.

What should be considered when developing IT project plans?

First, you need to have a clear business objective, or scope, that defines a project’s business value and what you will need to accomplish. This leads to the second consideration. What are the requirements? This is the time to develop what some call a charter — an agreement that defines the mutual understanding between the business and technical side. The charter defines the project by way of the business value it’s going to deliver, the scope that’s going to be covered and can even map out the first set of requirements that are needed.

Another critical consideration is to apply a strong project management discipline.

What can be done up front to keep IT project costs within budget?

This is a major challenge. Budgets need to be comprehensive in terms of providing estimates around business side costs, technical or integration layer costs, and organizational change and management costs, including categories like training, documentation and moving the solution into production.

But in order to keep it on budget, you really need to apply risk and issue management and constantly revisit your basic assumptions. Good project management relative to budget comes with identifying risks early. When risks become real, they turn into issues that need to be dealt with. To whatever degree that they are originating due to false assumptions at the beginning, that needs to be factored, and is all part of rigorous project management.

How can deliverables remain relevant during a long-term IT project?

The ‘Big Bang’ type of IT project is history. The old model of taking on a 10- to 18-month project and feeling good that we’re going to arrive at the end of that period with something that’s reasonable in terms of business value, is over. To reflect this change, projects need to be fundamentally restructured.

You must have a clear set of requirements that supports the business value, and you will need to break down the project into highly iterative releases, so that some of the business value is being delivered in as little as 60- to 90-day increments. This helps you to revalidate in an ongoing basis. Phasing the project into multiple iterations is extremely important.

How can clients help produce successful IT projects?

First, they should form a lead team, or steering committee, with both business side and IT representation. Second, a realistic set of boundaries should be developed that outlines what they hope to achieve relative to the business value and the project requirements given the budget and time-line. Finally, they should be aware of and avoid scope creep.

It takes a substantial communication plan to support this, but it doesn’t have to involve huge overhead. It can be done with the business and technical sides collaboratively working together. Any significant project must have joint ownership.

What are effective methods for handling ‘scope creep,’ or changing client requirements?

We call it refactoring, or planning for change in the business value and the delivery. You must have a systematic discipline for arriving at the iterative milestones within a company approval process. When an incremental value is completed, even within an iteration, the requirements should be reviewed with the business owners to make sure they’re still relevant. Early mockups of the user interface can be demonstrated to ensure that everything is tracking against their expectations. If feasible for approval purposes, an early prototype can also be implemented to provide a look and feel of how the software will work.

What golden rules will help reverse the project failure rate?

First, businesses should aim for improved business and IT collaboration, so they can arrive at, and deliver, the core issues. Second, break the project into smaller increments and get business value back into the business side sooner. Third, consider using different project approaches as a way to lower risk. Finally, you must have a process.

BILL RUSSELL is executive vice president of Allegient. Reach him at (317) 564-5701 or