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  Failure Rate
Statistics over IT projects failure rate.

To err is human but to really foul things up requires a computer.

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Before embarking on a "strategic" project, every organization should be aware of its "a priori" chances of success. Statistics over IT project failure rate provide a good measure of those chances. They are not shown to demoralize executives and to deter them from undertaking large projects. The purpose is to make them ponder on how to approach this endeavor so as to maximize their chances of success.

While looking at those data keep asking yourself : "what do I have more than the executives whose projects now stand on the casualty list ?"

The following surveys provide statistical data over the rate of failure of IT projects. 

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The Robbins-Gioia Survey (2001)

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The Conference Board Survey (2001) 

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The KPMG Canada Survey (1997)

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The Chaos Report (1995)

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The OASIG Survey (1995)

The Robbins-Gioia Survey (2001)

Robbins-Gioia, LLC, a provider of management consulting services located in Alexandria - Virginia, made a study over the perception by enterprises of their implementation of an E.R.P. (Enterprise Resource Planning) package.

Survey Scope

232 survey respondents spanning multiple industries including government, Information Technology, communications, financial, utilities, and healthcare. 

A total of 36 % of the companies surveyed had, or were in the process of, implementing an ERP system.

Key Findings

bullet51 % viewed their ERP implementation as unsuccessful 
bullet46 % of the participants noted that while their organization had an ERP system in place, or was implementing a system, they did not feel their organization understood how to use the system to improve the way they conduct business.
bullet56 % of survey respondents noted their organization has a program management office (PMO) in place, and of these respondents, only 36 % felt their ERP implementation was unsuccessful 

Comments on the Robins-Gioia Survey

Project failure is not defined by objective criteria but by the perception of the respondents. The advantage of a perception is that it naturally integrates multiple aspects. Its obvious disadvantage is that it is inevitably partial: if the respondent has taken an active role in the project it will inevitably embellish the reality, whereas if the project has been "forced down his throat" he might cast a grimmer look at the project outcome.

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The Conference Board Survey (2001)

Survey Scope

That survey interviewed executives at 117 companies that attempted ERP implementations 

Key Findings

bullet34 % were very “satisfied.”
bullet58 % were “somewhat satisfied,”
bullet8 % were unhappy with what they got.
bullet40 % of the projects failed to achieve their business case within one year of going live
bulletThe companies that did achieve benefits said that achievement took six months longer than expected.
bulletImplementation costs were found to average 25 % over budget,
bulletSupports costs were underestimated for the year following implementation by an average of 20 %.

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The KPMG Canada Survey (1997)

In April 1997, KPMG Canada sent a survey questionnaire focusing on IT project management issues to Canada's leading 1,450 public and private sector organizations. The main purpose was to outline the reasons behind the failure of Information Technology projects.

Survey Scope

Out of 1,450 questionnaires sent, 176 were analyzed. Of these, 61 % reported details on a failed IT project.

Key Findings

Over 61 % of the projects that were analyzed were deemed to have failed by the respondents. More than three quarters blew their schedules by 30% or more; more than half exceeded their budgets by a substantial margin. Considering that an estimated $25 billion is spent on IT application development in Canada annually, the survey data clearly indicate that unbudgeted IT project expenditures must run into the billions of dollars.

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The Chaos Report (1995)

The Chaos Report is the first survey made by the Standish Group. This report is the landmark study of IT project failure. It is cited by everybody writing a paper or making a presentation were a reference is made of IT project failure.

Scope of the Study

The respondents to the Standish Group survey were IT executive managers. The sample includes large, medium, and small companies across major industry segments : banking, securities, manufacturing, retail, wholesale, heath care, insurance, services, and local, state, and federal organizations. The total sample size was 365 respondents  representing 8,380 applications. In addition, The Standish Group conducted focus groups and personal interviews to provide qualitative context for the survey results.

Key Findings

The Standish Group research shows a staggering 31.1% of projects will be canceled before they ever get completed. Further results indicate 52.7% of projects will cost over 189% of their original estimates. The cost of these failures and overruns are just the tip of the proverbial iceberg. The lost opportunity costs are not measurable, but could easily be in the trillions of dollars in the United States alone.

Based on this research, The Standish Group estimates that in 1995 American companies and government agencies will spend $81 billion for canceled software projects. These same organizations will pay an additional $59 billion for software projects that will be completed, but will exceed their original time estimates. The Standish Group estimates that almost 80,000 projects were cancelled in 1995. Risk is always a factor when pushing the technology envelope, but many of these projects were as mundane as a drivers license database, a new accounting package, or an order entry system.

On the success side, the average is only 16.2% for software projects that are completed on-time and on-budget. In the larger companies, the news is even worse: only 9% of their projects come in on-time and on-budget. And, even when these projects are completed, many are no more than a mere shadow of their original specification requirements. Projects completed by the largest American companies have only approximately 42% of the originally-proposed features and functions. Smaller companies do much better. A total of 78.4% of their software projects will get deployed with at least 74.2% of their original features and functions.

This data may seem disheartening, and in fact it is, 48% of the IT executives in our research sample feel that there are more failures currently than just five years ago.

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The OASIG Study (1995)

This study has been undertaken under the auspices of OASIG, a Special Interest Group in the UK concerned with the Organizational Aspects of Information Technology. 

Scope of the Study

Information was collected in 1995 in the United Kingdom from a sample of 45 experts employed primarily by Universities or Consultancies. On average they have each over 20 years personal experience representing a cumulative knowledge base of over 900 years. Their drew their opinion from a sample of approximately 14,000 user organizations. 31 of these interviewees (69%) include consultancy work as a major component of their work, and 27 (60%) include research; many do both. Their professional areas of expertise cover the domains of management, business, and social science. A small number of those interviewed have a background in engineering.

Data were collected by interviewing researchers and consultants using a semi-structured interview schedule. Some preparation was required by them. Each interview lasted, on average, around 1.5 to 2 hours, though some lasted considerably longer.

Key Findings

The IT project success rate quoted revolves around 20-30% based on its most optimistic interviews. Bottom line, at best, 7 out of 10 IT projects “fail” in some respect.

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IT Cortex Conclusion

The statistics presented here all converge to establish that:

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an IT project is more likely to be unsuccessful than successful

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about 1 out of 5 IT projects is likely to bring full satisfaction

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the larger the project the more likely the failure

This raises of course a litany of questions:

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would an organization be better off without undertaking IT projects ?

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does the attention shown by top management for strategic projects reflect the actual stakes ?

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what will increase the chances of success ?

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what edge does my project have with respect to those on the casualty list ?

In essence managing a project consists in performing an optimization under constraints. A project aims delivering maximum functionality within a given budget and within a given timeframe. The IT Cortex approach aims at maximizing the overall Pareto efficiency of that project within its organizational environment and of the whole organization within its market environment.

Should you wish to get more information, do not hesitate to contact us. Alternatively, if you have access to additional statistical data over IT project failure that you would like to share with us, we would be delighted to hear from you.

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