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Research conducted by McKinsey in collaboration with the University of Oxford suggests that half of all large IT projects (defined as those with initial price tags exceeding $15 million) massively blow their budgets. The research asserts that 45% of such projects run over budget, whilst 7% fail to meet their deadline. What’s more, over half (56%) of these projects don’t deliver their promised value.
Ongoing innovations in IT mean it is extremely important for businesses of all sizes to stay abreast of the latest tech trend and in doing so, understand just how different technologies can be embraced to improve the manner in which they operate. While many profess to understanding IT, the fact that large corporate organisations typically experience failure when undertaking major projects suggests there are some inherent factors holding them back from seeing these projects through.
So why is it that the rate of failure for IT projects is so high, and how can large businesses ensure their next IT project has every chance of being a success?
Doomed to fail from the start?
Let’s cast our eyes to arguably one of the biggest IT fiascos of all time concerning the UK’s National Health Service (NHS), otherwise known as the National Programme for IT (NPfIT).
The NHS is facing battles on many fronts. Amongst others is a chronic lack of resources and increasing demand for its services, made more pressing by an ageing population. As such, technology is naturally positioned to address these challenges and help alleviate some of the mounting pressure being placed on the NHS.
However, large-scale attempts to reboot the NHS through IT have largely failed due to poorly managed and executed digital strategies. Launched in 2002 to usher in a new age of digital health by creating a centralised IT system, the NPfIT project is a prime example. After ten years of technical hurdles, delays and difficulties with suppliers, the project was eventually shelved – with the taxpayer’s bill totalling £10 billion.
The problems of the NPfIT project were multifaceted, but largely stemmed from a disconnect between different stakeholders about the desired end goal of the project, and a poor understanding of how technology could effectively utilised to support the day-to-day lives of healthcare professionals. This ultimately meant that the system had unprecedented scale and boundless complexity, making it ridiculously difficult for users.
Extreme inflexibility was also a problem: when obstacles were encountered during the various implementation stages, the strict structures of the NHS scuppered any chance of creative problem solving.
So, what can large organisations do to ensure their IT projects are doomed to fail from the beginning?
Looking to startups to support IT projects
Organisations can avoid time and cost overruns, and ensure that IT projects deliver the expected value, by looking towards their smaller, flexible counterparts for inspiration.
Indeed, startups lead technological innovation in almost every industry, pioneering solutions by utilising the likes of artificial intelligence (AI), cloud computing, big data and the Internet of Things (IoT) – modern technologies that many corporates struggle to get to grips with. Thus, building bridges between corporations and startups has become crucial to drive innovation within organisations.
What advantages do startups have? For one, they tend to consist of small teams unburdened by hierarchies and levels of management: factors which force the latter to resort to highly calculated risks, making it impossible to quickly adapt to the ever-changing technological landscape. Startups’ flexibility and risk-taking culture means they’re more willing to overturn existing business models to adapt to changing market demands.
What’s more, whilst technologies like IoT and AI offer new tools for businesses to creatively solve problems, they are useless if organisations don’t have the experts who know how to use them. The technical complexity of large-scale IT projects will mean corporates simply don’t possess the skills needed to complete them to a high standard, despite generally having more resources at their disposal.
In contrast, startups are forced to be innovative in order to survive the highly competitive new business environment. They must constantly look out for ways they could gain an edge over their competitors. Innovation is in the DNA of these businesses, propelling them to adopt disruptive technologies that can improve operational efficiencies, augment their offering, and make themselves indispensable to consumers. Whether it be outsourcing IT projects to external agencies, or establishing in-house tech incubators, corporates can limit their tech failures by embracing startup attitudes.
After all, there’s nothing to say that corporates and start-ups need to be natural competitors, so why shouldn’t we be promoting partnerships instead?
