Fear, uncertainty and doubt stalk IT projects

4 Nov 2004

The idea that technology is there to make our lives easier and businesses run more efficiently took a cruel knocking in recent weeks due to the high-profile disclosure of costly IT failures. Hewlett-Packard (HP) chief executive Carly Fiorina had to reassure financial markets in September after a failed SAP consolidation not only hurt its reputation with customers, but cost the company some US$400m in third-quarter revenue and knocked 40pc off the company’s share price.

More recently, there was the disclosure that a four-year Business Transformation Programme failure cost UK retail giant Sainsbury’s some £3bn sterling, leading the company to resort to rebuilding its entire in-house IT team. Sainsbury’s chief executive, Justin King, says that the “balance of responsibility” lay too heavily with IT consultancy Accenture, with whom a renegotiated contract will see the retailer rebuild its in-house IT team.

A ‘culture of chaos’ between the responsibilities and objectives of IT workers and the day-to-day, week-to-week and year-to-year business objectives of management is being blamed for not only such high-profile failures, but also for an increasing spate of IT failures across the board in both small and large companies alike.

In recent weeks, BMC Software reported that one quarter of European firms report losses of between €50k and €10m as a direct result of IT failures due to serious misalignment between the objectives of the board and the requirements of the IT function. Indirectly, as much as 80pc of all IT projects experience failure at some point or another. A core reason for this level of failure, say 52pc of European IT decision makers, is that business strategies and IT strategies are not in harmony.

“Some 80pc of IT projects fail,” says Jonathan Priestley, director of enterprise data management at BMC, citing HP’s embarrassing admission and Sainsbury’s massive IT flop. Priestley warns that a major communications gap was to blame. According to BMC’s recent survey, some 62pc of those interviewed believed that changes in business objectives were not communicated quickly enough for the IT function to respond effectively and 16pc of IT decision makers claimed that changes are either not communicated to them at all or were only communicated informally by word of mouth.

Improved communication was at the top of the list of needs for IT decision makers to ensure closer alignment of business and IT objectives. Over a third of IT decision makers (33pc) felt they should spend between half an hour and one hour extra a week with their CEO in order to understand what was required from their IT function.

The research also indicates that only 15pc of senior IT decision makers felt that their department provided the company with any unique competitive advantage, whilst 12pc had seen critical business processes — such as billing and accounting — completely fail as a result of technology in the past 24 months.

Alan Smith, BMC’s managing director and vice-president for Ireland and the UK, states: “We cannot leave IT decision makers operating in the dark and then wonder why technology can not meet our business needs.

“Businesses must bridge the communication gap with structured operations meetings to ensure all departments are briefed on the latest business objectives. This will allow IT decision makers to improve the speed and quality of their IT services, to improve strategic planning activities and concurrently provide operating cost reductions. These are essential ingredients to help companies achieve long-term success,” he says.

At a conference last week in the Belgian port of Antwerp, BMC unveiled a new process methodology for implementing IT projects that takes into account business reality and the aspirations of IT workers. Known as business service management (BSM), the methodology enables companies to understand and predict the impact of technology changes on the business, and conversely, how changes in the business impact IT, resulting in improved customer service and business performance.

“The impact of failing IT projects is impacting on business results,” explained Paul Arthur, head of corporate strategy for BMC’s EMEA operations. “There is one constant: IT is only there to support business. Without business, there is no requirement for IT.

“There was a time only recently when technology acquisition was running ahead of business acquisition,” Arthur said, alluding to the technology boom that ended abruptly in 2000. “There has to be a business perspective for everything that IT professionals do. There is no point introducing new technology unless there is a perspective on how that new product delivers tangible value.

“IT budgets are starting to stabilise and once again businesses have a chance to invest in new projects, new markets and new developments. But if you are going to invest in a new technology there has to be a business requirement for it and a clear path for return on investment. As a result, IT professionals are being challenged more to improve business agility.

“BSM is not just about IT delivering services for businesses and their customers but also guaranteeing services for tomorrow and drive value,” Arthur concluded. “There is no IT without business. Value is key.”

By John Kennedy