Most IT Projects Fail: 75% of Projects Fall Short of Goals
By Avendata | March13, 2023
IT projects are not always successful—such is the price of innovation. Yet, depending on the source, up to 85% of these projects fail, which seems astronomical. In contrast to other industries, developing information technology solutions has not decreased its failure rate over the past 20 years. The question is, what are the causes, and what can companies do to improve? Why is the failure rate so high, and what are possible strategies to reduce it? And what are the specific challenges of archiving legacy data?
IT projects often fail: not at AvenDATA
Failure is difficult to measure in IT. Many factors determine the success of a project, but there is no industry-wide terminology. According to German analysts, about half of all IT projects fail. Industry experts, noting the high number of unreported cases, put the failure rate for German companies at around 75%. This seems excessive, but Germany still performs better than many other countries.
According to the PMI Global Project Management Survey 2017, software projects in particular are notorious for falling short. A total of 14% are cancelled without any results, 31% do not meet their objectives, 43% exceed their budget and 49% exceed the agreed timeframe. Only 15% of projects are delivered as planned.
Since 1995, the CHAOS Report of the Standish Group has collected new numbers from the IT industry every two years. In 2015, only 15% of the cases examined were found to have successfully completed the project. Although this study refers to software development projects specifically, it provides an indication for the IT industry in general. Encouragingly, the report found that 66% of IT projects in Germany were generally successful. However, 19% were over budget, behind schedule or had limited functionality. 15% were considered a complete failure and were either cancelled without results or never used again.
Last year, AvenDATA was an outlier among German IT service providers regarding its success rate. The company was successful both in terms of budget and timeframe. This result is particularly interesting because legacy systems are responsible for a wide range of potential risks in corporate IT.
According to CEO Emanuel Böminghaus, target-oriented project management is the key to the company’s success: “All projects are budgeted with a fixed price in advance. Therefore, we are very interested in completing the projects on time and free of any errors”.
Why IT projects fail
A study by BITKOM e.V. found that 75% of all IT projects fail due to errors in the set-up phase. According to the study, the most common reasons for the failure of IT projects are unclear or inadequate requirements, incorrect time and budget planning, and inadequate communication between project participants. This is consistent with surveys conducted by the German Association of IT Users (VOICE e.V.).
This mismatch inevitably leads to an increasing number of organizations with legacy
systems. It is therefore not surprising that 59 per cent of respondents believes that failures
are likely to occur within the next three years. Respondents believe that legacy system
failures will have a significant impact on the IT supply chain and business operations. This
suggests that there is a growing need to refresh systems. Cloud technology is currently the
best way to do this.
The authors of the CHAOS report identify 10 factors that are critical to the success of a project:
Involvement of the upper management
Experienced project managers
Reduction of project size
Many of the points in this list may seem obvious. Successful IT projects are based on clear objectives, effective communication, clear process flows and consideration of user needs. However, one factor that is regularly neglected in practice is top management support. All necessary organizational and process changes require the support and sponsorship of senior management. Effective change management does not work without the participation of decision-makers. Without top-level support, it is impossible to implement sustainable changes within the organization.
Specific risks with legacy systems
A recent independent survey by Computerwoche found that 98% of companies surveyed run critical IT on legacy systems. 59% of respondents said that these legacy systems require more maintenance than modern components. Due to their complexity, legacy systems are often difficult to maintain, which can lead to higher error rates. Archiving legacy data can significantly reduce or eliminate the likelihood of errors in other projects.
Data quality is another important argument for archiving legacy data. If information cannot be mapped or transferred to a new system, years of data can become unusable. Unstructured data, which is virtually useless for current business operations, accounts for up to 70% of the storage of German companies. This means that two out of every three files in an organization are consuming storage space without adding any value.
Archiving and retrieval with AvenDATA’s ViewBox software allows this legacy data to be used again. Authorized users are provided with new access rights that enable them to retrieve the relevant records. Unused data is reliably identified and removed.
Solution: Improve the quality of IT project management
An essential aspect is the problem-oriented approach. In addition to problem-solving, projects require technical expertise and proactive planning. Another critical element is the proactive orientation of projects, which requires interdisciplinary cooperation and open communication. Projects should be evaluated with a focus on results and are usually unique and rarely identical. Successful project work should be as non-hierarchical and team-oriented as possible.
A successful IT implementation requires a close link between business processes and IT. Project objectives should always be defined in line with the company’s business strategy and financial goals. The current situation must be carefully analysed to establish a basis for demonstrating cost-effectiveness. Possible approaches and potential for improvement must be identified and evaluated.
Developing realistic targets is essential. Responsibility for all processes and user needs must also be clearly defined from the outset. Detailed contracts help to keep things on track. If the legal framework is right, it will have a positive impact on the development process. Conflicts that can derail an IT project are effectively avoided, as Dr. Fiona Savary of CMS Law confirms.
Flexibility, planning, and communication are the keys to success
Compared to many other industries, IT companies are extremely susceptible to disruption. However, the high failure rate is not a sign of categorical failure. It simply shows that an innovative industry has to deal with setbacks. Companies must therefore develop strategies to deal effectively with their problems to ensure the success of their IT projects. Only through careful planning and implementation, followed by monitoring, will it be possible to identify and respond to project difficulties accordingly.
Project management must therefore be agile and able to react quickly and flexibly to changes. New processes are only designed if they make sense from a business and financial perspective. However, this flexibility must be taken into account when scheduling. The complexity of IT projects can always lead to delays and problems. Ultimately, however, these challenges can be tackled much more effectively through clear division of labour and open communication.