Investing in significant software technology can be a business-altering and expensive experience. According to Gartner, one of the world's leading information technology (IT) research and analyst firms, 70 percent of all major software technology projects fail to some degree, and 25 percent of completed projects are eventually abandoned. Software investments fail because many business leaders do not understand or follow the necessary steps to successfully undertake significant technology projects — and many technologists do not understand the true needs of the business. The failures are compounded when problems arise and the legal contracts do not define and capture the business expectations. This article outlines a process that will help your project be successful and protect you should problems arise.
There are no technology projects, there are only business projects. Solving a business problem must be the driving force. Software technology is only a tool to help solve the problem. With that in mind, we recommend the following process:
Step 1: Regardless of your size, set up an IT governance board (ITGB) that includes key business decision makers and a technology leader who understands the business. The goal is to make business decisions, not technology decisions, and to act as one business, not as separate silos of individuals, departments, or divisions. IT governance is different from the actual managing of a project. Once the project has been given the green light, it is important to follow an agreed-on project management model.
Step 2: Establish IT principles that all employees understand. Are your IT investments strategic, or simply a necessary expense? Do you want your company to be on the leading edge of technology, or stick to tools with a proven track record? These principles will help set the tone for IT decision making in your organization.
Step 3: Establish expectations for how IT services are going to be delivered to your internal and external customers. Which services will be common and shared by all, and which business units may need special services? Which services will be outsourced?
Step 4: When requests are made for a new business capability requiring an investment in technology, require that a business case be made by the requestor or sponsor of the project to the ITGB. Establish business priorities and investments by using a consistent set of factors by which to evaluate the request. The factors should measure the project's value to the business; evaluate whether and how the project furthers company objectives; determine business and technology resource availability; and estimate the risk to the business of doing or not doing the project.
If the business case is accepted, the sponsor must stay involved with the project to completion to ensure that the objectives originally defined and accepted by the ITGB are met and remain constant throughout the project. The sponsor establishes and oversees the business aspect of the project and is responsible for making sure the business objectives are met. The sponsor's role is critical to preventing IT from taking over the project and modifying or avoiding the business purposes.
Some companies are fortunate to have a chief information officer (CIO) to manage technology projects with the business objectives foremost in mind. If you do not have a CIO, you will be forced to rely on your vendors and IT department for the success of the investment. Recognizing the potential limitations of your IT organization is crucial when it comes to investments and the lack of neutrality of any given technology vendor. If you do not have a CIO, consider hiring a consulting business-savvy CIO to mentor your project team and provide ongoing review and counsel.
Once you have taken these steps, invest in developing a contract with the technology vendor that captures your expectations. If the project is properly scoped, there will be many milestones, testing, and standards for success. A good contract will quantify and clearly define the milestones, testing, and standards, as well as your business expectations. Generally, if the vendor promises it, make it a condition of the contract. Include specific performance standards, timelines, and drop-dead dates for performance, all with effective remedies should the vendor fail to deliver.
Significant and expensive problems can arise if the project does not meet your expectations and those expectations are beyond the legal obligation of the vendor. Some expectations may be goals, as opposed to legal obligations, but identifying those in advance will help drive the success of the project.
Preparing the legal contract requires substantial communication and collaboration between the CIO or project manager and your attorney. By following the recommended process, you will be providing your attorney with a well thought-out business document as a starting point. Provide your attorney with all relevant documents, and identify and quantify your business needs and expectations. In the normal process, dialogue with your attorney will uncover more questions and issues to be resolved.
In addition to defining your business expectations, specifying the project, and ensuring that your vendor understands its obligations, your contract must protect your ability to modify the process or to walk away if the technology and process fail. While most large vendors have well established contracts and provisions, they recognize that their standard contracts are subject to modification, so don't hesitate to request changes. It is most important that the contract define and protect the business objectives that you expect to be achieved by the technology project.
Software technology advancements have brought us new and exciting business tools. These software programs and technology are not the focus, but the means to deliver on business goals and objectives. You will substantially increase your odds for a successful technology project by using a process that brings business goals and objectives to the forefront, in conjunction with legal contracts that protect your investment.