Why Your Next Big IT Project is Doomed

Have you had a IT project go astray? Maybe you were lucky and it was a brief hiccup with minimal financial consequences. Or maybe you had a disaster of biblical proportions, such as the one that befell Levi Strauss in 2008.

By Mark Gibbs
Thu, May 09, 2013

Network World — "The coming meltdown of IT; the out of control proliferation of IT failure is a future reality from which no country or enterprise - is immune. The same IT failures that are eroding profitability in the United States are impacting the economy in Australia. IT failures are rampant in the private sector, the public sector, and the not-for-profit sector. No place is safe. No industry is protected. No sector is immune. This is the danger, and it is real."-- Roger Sessions, CTO, ObjectWatch

Have you had a IT project go astray? Maybe you were lucky and it was a brief hiccup with minimal financial consequences. Or maybe you had a disaster of biblical proportions, such as the one that befell Levi Strauss in 2008.

In 2003, deciding that their "old school" data processing systems needed a facelift, Levi Strauss decided to spend $5 million on implementing an ERP system based on SAP with the help of business and IT consultants, Deloitte. Mostly due to poor requirements specifications, some five years later Levi Strauss took a $192.5 million charge against earnings. This was caused, in the main, by having to shut down all product distribution for a week while switching over to the new system. How on earth did that ever happen?

The Harvard Business Review commented in a 2011 article: "what happened at Levi Strauss occurs all too often, and on a much larger scale. IT projects are now so big, and they touch so many aspects of an organization, that they pose a singular new risk ... They have sunk whole corporations. Even cities and nations are in peril."

So, how big is the problem? Well, how much do you think IT project failures cost annually on a global basis? In his 2009 white paper, "The IT Complexity Crisis: Danger and Opportunity", Roger Sessions, CTO of ObjectWatch, a consultancy specializing in IT architecture and systems complexity, estimated the cost to be roughly $6.2 trillion per year with the U.S. accounting for some $1.2 trillion of that total.

Not everyone, however, agrees with Session's estimate, notably Bruce Webster, principal and founder of Webster Associates LLC, who analyzed Session's financial estimates. "Sessions is fundamentally wrong in his numerical analysis, and his numbers are off by far more than 'ten or twenty percent,'" A Webster says. A His estimate of $500 billion/month in lost direct and indirect costs due to IT systems failure just does not hold up, in my opinion."

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Originally published on www.networkworld.com. Click here to read the original story.
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