Around 80% of technology projects fail according to IT research firm Gartner. Facing up to these odds is unavoidable as corporations aspire to reduce costs by automating tasks and rationalizing the number of disparate core systems.
Tools like artificial intelligence and predictive analytics oblige businesses to modernize capabilities to be competitive. For example, leveraging big data could help in tailoring product offerings to different customers and increasing revenue. A practical way to develop such capacity would be to consider what data a business needs to collect to answer critical commercial questions.
Structured data from in-house applications is low-hanging fruit given that it is cheaper to acquire compared to purchased data. Additionally, data formats are standardized, making analysis and use of visualization tools simpler. But data collection is a prickly subject given attendant privacy laws. Legal due diligence must be peremptorily embedded in the enterprise data strategy. Well-implemented systems are value accretive; how then does an organization successfully navigate this treacherous terrain?
Enterprise-wide view
Data and system concerns must be evaluated at an enterprise level. Fragmented data sources are common in organizations that have scaled by acquisition or where collaboration efforts between complementary teams are weak. Several systems are used by unique teams for a common purpose. Duplicated technology licensing costs arise with the added burden of reconciling data. Financial enterprise data is used for management reporting, making finance teams key participants in any technology project, in addition to their stewardship and governance roles.
Improving collaboration is essential for project success. Early consideration of prominent challenges faced in transformation programs will prepare management to negotiate common pitfalls.
Here are some of the top risks in technology projects:
- Poorly defined scope or misunderstood business requirements
The program scope is the contract between the program delivery team and the users. A vague contract is often the root cause of disappointment and dispute between stakeholders. Dispute resolution can only be achieved through costly reworking that upsets project cadence.
- Due diligence on technology solutions
Securing a solution suitable for diverse user groups is challenging. System selection is a demanding process given the variety of options available. Licensing costs, delivery schedules and vendor support are all crucial and must be carefully considered in vetting potential partners. Nuances in functionality could easily differentiate between timely generation of quality data outputs and spreadsheet heavy manual reconciliations. The latter scenario raises the risk of material errors, especially under tight reporting deadlines.
Hidden costs like exchange rate volatilities and non-refundable taxes could arise where vendors are offshore. Switching costs for core technology systems are extremely high considering staff training, project expenditure and disruption to daily activities. Often, this causes IT systems to have lengthy tenures regardless of user or customer experiences.
- Resourcing
Projects are an additional deliverable to daily routines, which are ordinarily resourced with external consultants due to limited internal capacity. Key project roles could be assigned to consultants who are not familiar with entity processes, which raises the risk of flawed decision-making. Decisions could also be implemented without adequate governance and consultation, a recipe for rework.
Here are some high-impact strategies for enterprise leaders to enhance prospects of success:
- Clearly define scope
Scope definition is fundamental to delivering project outcomes efficiently. Business teams must be clear on which functionality and benefits are sought from new systems. This is an underestimated task; for example, when considering the vast offerings of ERP systems. Cross-functional teams impacted by proposed system changes must be identified early and tasked with contributing to detailed scope requirements. Cost blowouts from reworking can be averted and establish internal cohesion. C-suite level approval for delivery must follow recommendations of project resources. Change request approvals must be diligently implemented to prevent scope creep.
- Vendor and solution due diligence
Evaluation of software vendors should include credible client references to assess user experience and availability of technical support. Taxation professionals should also review contracts to identify any tax exposures including cross-border ones, and how these can be mitigated. Cross-border contracts introduce exchange rate exposures. Management should assess whether these can be naturally hedged; for example, where the entity has uncommitted income cashflows in the billing currency of the vendor. Where no mitigations exist, the cost impacts must be reflected in budgeting for improved return on investment analysis.
Systems must also be rigorously evaluated by referencing enterprises running similar operations and processes to ensure the solution is scalable and can satisfactorily manage transaction volumes.
- Retention of key resources
Resources with accumulated or specialist knowledge on the project must be incentivized to support the project to conclusion. Continuity of personnel is key in ensuring the project cadence is not disrupted. The costs of training new staff are also reduced while maintaining elevated levels of engagement in the delivery team. Skills mobility, however, is inevitable. This makes strong governance practices such as detailed documentation of processes in the project essential in reducing onboarding lead times for new starters.
Navigating the complexity of technology transformation
Technology transformations are complex undertakings, often with major associated budgets. Clear scope, careful vetting of system vendors and retention of key resources will lay a strong foundation for successful project completion.