Articles

Why do “successful” technology projects fail to produce expected business results?

February 12, 2006

Technology and people

Over the last few decades, the use of information and communication technologies (ICT) has grown tremendously. ICTs occupy a predominant place in modern society, both in private life and in business activities. In particular, the integration of information processing and telecommunications has led to mobile wireless communication, the Internet, e-commerce, private and social groupware, and various other means of exchange and collaboration. In the 21st century, these new technologies offer both the promise of radically improving the quality of life and the efficiency of sharing and exchange between individuals, but also the risk of social and commercial disasters (e.g., the FoxMeyer bankruptcy[1]).

While the majority of studies support the use of ICT as a lever for change, others also indicate that there are significant forces that maintain the status quo in organizations, despite successful implementation of technology [2]. This research points to the profound influence that social and organizational contexts have on the adoption of new ways of doing things related to technology. Implementing technology is a significant challenge, but changing the habits of individuals and the “rules of behavior” associated with a culture is a much more complex challenge.

Companies estimate that over the next few years, the majority of their employees will experience significant upheaval due to the implementation of changes [3]. Considering the immense sums of money regularly invested in new technologies and the low rate of realization of expected business results, can we really leave success (or failure) to a matter of luck?

One thing is clear

Many are increasingly questioning the added value of new technologies in terms of their contribution to business results. Technological obsolescence is now a matter of months, not years. So how do you ensure that such large investments pay off?

The magical thinking syndrome.

The mere fact that a technology is installed, operational and available is no guarantee that the expected benefits will be realized. Those who believe otherwise have a simplistic reasoning that many have decried for years. Despite management support and initial staff enthusiasm, many technically successful projects are considered business failures, in that they do not produce the results and changes that were expected.

Some then take advantage of this to extol the virtues of participatory approaches, as promoted by process reengineering and Agile, various technology firms and modern methods. However, although these approaches are significant – even essential – contributions to the success of projects, they are not sufficient.

This phenomenon is not limited to technologies.

Several studies also report that the vast majority of process transformation or reengineering initiatives do not produce the expected results. [5] Other recent studies also show that changing the organizational context in which people work does not necessarily mean that their “work habits and ways of thinking” will be significantly modified.[6]

These initiatives do not achieve the business objectives set because the organizational issues, and particularly the human component, are not adequately addressed.[7] Worse, since the turn of the century, the majority of change management approaches have become formalized and mechanized based on precepts derived from the experience of implementing software solutions and discontinuous change periods.

Unfortunately, today we live in a context of multiple, competing and accelerated changes, which makes change an even more difficult, often painful and always costly process. Managing change in this new context is a complex process that goes beyond the usual term of traditional change management.

Better manage the human element

Today, leading change and transformation requires flair, creativity and diplomacy. Invariably, large-scale initiatives often provoke unpredictable reactions and can be met with strong reactions. Despite the potential appeal of a change, those affected will naturally show reluctance, at least initially.

Understand the source of fears and concerns.

Anticipation of discomfort and fear of the unknown regularly lead to the failure of change initiatives. Any key player who perceives change as a threat to his or her personal interests or position in the organization will be inclined to defend his or her gains. Consequently, any action that is perceived as imposed can increase the degree of resistance to change, while endless debates can be interpreted as a sign of leadership’s inability to make decisions.

For staff, these changes can generate different emotions: uncertainty, confusion, frustration, disappointment, helplessness, anxiety, etc. These arise from an often irreconcilable conflict between the way each person used to perceive his or her work and the organization around him or her, and the updated perception of the values, beliefs and behaviors of the leaders. This inconsistency challenges the understanding of one’s role in the organization, leaving staff momentarily unable to make sense of events and their work environment. Under such conditions, some may even try to undermine the change project.

As Nicolas Machiavel observed:

“There is nothing more difficult to take in hand, more perilous to direct, or more uncertain, than to engage in the establishment of a new order of things, for innovation has as its enemies all those who have prospered under past conditions and has as its lukewarm defenders all those who can prosper under the new order of things.”

Giving change a chance to sink in…

It is good practice to proceed cautiously with “pilot” projects and then, when the preliminary results are conclusive, to proceed with a gradual rollout throughout the organization.

It is important to keep in mind that the conditions that prevail in the context of a pilot project are not necessarily the same for the entire organization. Very often, the pilot group is largely composed of early adopters, that is, 30% of individuals already predisposed to the proposed change. Following a successful pilot, there is a tendency to quickly look forward to the future success of the project. However, the conclusion reported by these pilot projects is biased and does not represent the chances of success of a roll-out to the entire organization.

… without rushing.

Unfortunately, it is the 65% of recalcitrant conservatives who typically cause change initiatives to fail, and because they are difficult to work with, they tend to be pushed aside in projects. Such forces in the enterprise prevent the required changes to work habits from being realized.

As a result, newly implemented technology is often used strictly to maintain the status quo.

But this is not new

It is not a recent phenomenon: almost half a century ago, Henry Lucas already suggested that “the primary cause of information systems failures is related to organizational behavior problems.”[8] In 1987, R.J. Long reported that 10% of failures in business applications were caused by technical problems, while 90% could be associated with “organizational issues.”[9]

Also, senior executives from Fortune 500 companies have confirmed that “resistance to change” is the primary reason for failed initiatives. Similarly, a Deloitte Consulting survey of CIOs concludes that resistance is the primary reason for project failure. Not a lack of resources or skills, but rather that delicate and emotional reaction that human beings have to change.[10]

Intuitively, most leaders are aware of this phenomenon. Unfortunately, research also shows that most do not manage these issues adequately.[11] Even today, few companies train their leaders in change management, or frame their change initiatives with a formal or institutionalized process. The results are changes that happen “by accident”, often too late, at the cost of great organizational difficulties.

Key lessons:

The mismatch between the pace of change and the capacity of staff to absorb it is also a fundamental cause of the failure of change initiatives. [11] Because changing behaviors and “ways of thinking” is typically more demanding and less tangible than changing technical solutions, the human factor is overlooked.
Several studies conclude that although almost all leaders consider organizational issues to be at least as important as technical issues, they address these issues only superficially, if they do at all. [12] It appears that key stakeholders do not have the time, tools, or expertise to address organizational issues, no matter how important they are. In addition, because of the strong constraints of the projects, organizational issues are often ignored in favor of delivering a technically sound system on time and on budget. Because of the intangible, ambiguous and political nature of organizational issues, they are often treated superficially and neglected to formally address the real concerns underlying the “resistance”. As a result, in most cases, the management of these issues is “left to chance” and slides between the support functions and the leaders of the business areas involved.
Some argue that underestimating the impacts of change is the predominant factor that leads to failure [13] Gartner cites a study of the relationship between technology projects and the degree of organizational change. The researchers observed that the organizational fabric is significantly affected as soon as the change affects the hierarchical structure, business model, communication channels, authority, work chains or roles and responsibilities. The very nature of relationships between individuals and groups throughout the enterprise is altered. Gartner concludes that underestimating the scope of such a change inevitably leads to cost and time overruns, which significantly increases the risk of project failure. Properly assessing the organizational impacts of any change resulting from the introduction of new technologies is therefore a success factor [13], if this analysis is conducted seriously with the right stakeholders.

Conclusion

Simply being aware of internal political games is insufficient; a program that addresses the organizational issues associated with transformation must be developed and implemented proactively and integrated across the entire initiative.

While change management activities can account for up to 25% of a project’s total spend, depending on the scope of the change being addressed, companies that adhere to such a program will see a significant increase in the business success rate of their initiatives.[12]

Today, companies need to develop sustainable adaptability so that their organization and people are able to absorb more change in the future. There is no reason to believe that the pace of organizational change will slow down; on the contrary, it is accelerating. Proper investment in managing the human side of any change contributes to an organization’s growth and ability to survive rapid and continuous change. This ability is an important competitive advantage.

I believe that achieving a major transformation or change requires more than meeting the objectives of a plan, the charisma of good leaders or the disjointed execution of multiple siloed initiatives. Combining and coordinating the efforts of the various disciplines involved in a project, and supporting this coordination with approaches based on benefits realization [4], risk management and program management, seems to be an effective way to lead large-scale change in an organization. Unfortunately, the isolation of research in these disciplines does not allow us to demonstrate this today.

References

1 Jesitus, John, « Broken Promises? – FoxMeyer’s project was a disaster. Was the company too aggressive or was it mislead? », IndustryWeek, 3 novembre 1997.

2 Olesen, Karin et Myers, Michael D. (1999), « Trying to improve communication and collaboration with information technology – An action research project which failed », MCB University Press, Information Technology & People, Vol.12 No.4, pp. 317-332.

3 Peter Scott-Morgan, Erik Hoving, Henk Smit and Arnoud van der Slot, « The End of Change », Arthur D. Little, 2000.

4 Thorp, John, « The Information Paradox : Realizing the Business Benefits of Information Technology, McGraw-Hill Ryerson, 1999.

5 Kearney, A.T., étude citée dans le rapport de Business Intelligence intitulée « Managing and Sustaining Radical Change », 1997.

6 Moreno, Valter Jr. (1999), « On the social implications of organizational engineering – A phenomenological study of individual experiences of BPR processes », MCB University Press, Information Technology & People, Vol. 12 No. 4, pp. 359-388.

7 Kabat, D.J., « Information Technologies to Manage the Next Dynamic », dans Berger et Sikora (Ed.), The Changement Management Handbook, Irwin Professional Publishing, NY, 1994, 221.

8 Lucas, H.C. (1975), « Why Information Systems Fail », Columbia University Press, NY.

9 Long, R.J. (1987), « New Office Information Technology : Human and Managerial Implications », Croom Helm, Londre.

10 Rick Maurer, « Using Resistance as a Force for Change », OD Practitioner, Issue 2, 1999.

11 Young, C., « Using Change Management to Improve Strategy Execution », Gartner Group, Research Note, K-09-2877, 8 octobre 1999.

12 Doherty, N.F. et King, M. (1998), « The importance of organizational issues in system development », MCB University Press, Information Technology & People, Vol. 11 No. 2, pp. 104-123.

13 Young, C., « Understanding the Total Magnitude of IT-Driven Change », Gartner Group, Research Note, DF-09-3188, 8 octobre 1999.

14 Santos, John, « The Politics of Change », META Group, Executive Directions, 7 septembre 1999.

Also see:

Bussen, W. et Myers, M.D. (1997), « Executive information system failure : a New Zealand case study », Journal of Information Technology, Vol. 12 No. 2, pp. 145-153.

DeSanctis, G. (1993), « Shifting foundations in group support system research », dans Jessup, L.M. et Valacich, J.S. (Ed), Group Support Systems : New Perspectives, MacMillan, NY.

Myers, M.D. (1994), « A disaster for everyone to see : an interpretive analysis of a failed IS project », Accounting, Management and Information Technologies, Vol. 4 No.1, pp. 19-37.

Walsham, G. (1993), « Interpreting Information Systems in Organizations », John Wiley and Sons, Chichester.

Walsham, G. (1995), « The emergence of interpretivism in IS research », Information Systems Research, Vol. 6 No. 4, pp. 376-394.