Reasons information technology system projects fail: organizational and technical factors

¶ … Information Technology System Projects Fail

Information system projects mostly end up in a failure. Along with inherent factors such as technical issues delaying implementation and indefinable expectations of customers, inappropriate budgeting and opposition to business process reengineering also makes the project go up in smoke. (Scott and Vessey, 2002) The first step towards a project's success is its objectives which should be specific, measurable and realistic. Researchers have previously emphasized on the importance of defined objectives and highlighted that approximately 50-70% of projects fail due to objectives being vague and uncertain. Shortly thereafter, the significance of budgeting was also highlighted in a 1998 fortune article which stated that around 90% of ERP projects are delayed as costs go beyond the amount estimated, and even after all these hurdles, only one-third of ERP projects prove to be successful. This is a notable calamity which affects the entire world; one of the most affected nations being China where ERP failures are predicted to be around 90%. (Zhang et al., 2003)

To this date, we have not come across any evidence that can give us some surety that the problems are close to extinction; not that they are overlooked by researchers but the fact that success rates haven't changed leaves us in a dilemma.

IS Projects and their Success

As advocated by Tornatzky and Fleischer (1990), there are three components that can be associated to the success of IS (Information Systems) applications; the external environment, organizational context and technological context. Where the external environment signifies the effect of customers, suppliers, competitors and government, organizational and technological context focuses mainly on the internal factors influencing a project. The technological framework points out how problems in hardware, software and telecommunication lead to a project's failure. On the contrary, factors such as corporate culture, leadership and IS based knowledge are included in the organizational context.

As mentioned earlier, the problem of IS failure was not ignored by researchers; as a result different writers have different theories giving various reasons of why projects fall short. Kumar, (2000) who is a predecessor of ERP implementation, is of the view that organizational framework plays the most important part in IS development. Certain aspects of organizational structure for instance, its culture and attitude of senior management are crucial to a project's success. Lack of synergy in an organization, unprofessional attitude from senior management, and incompetent leadership are three prerequisites that make the project a sinking ship.

As leadership surpasses all other organizational factors, it would not be wrong to establish it as a single endorser to any project's downfall (Roepke, Agarwal, and Ferratt, 2000).

Organizational factors can be explained in the form of a paradigm, with leadership being in the centre affecting all other components, such as culture, strategy and staff commitment. Along with these constituents, it also impinges on system development, implementation and maintenance. A strong and competent leadership can enhance the success rates of IS projects. Therefore, it should be given due consideration. To classify it as a Critical Success Factor in theoretical books is not the answer to this solution, researchers should dig into this concept, analyze it further and leave no stone unturned. This is a key to all solutions, an answer to all questions, but a lot of hard work is required to make it work as all aspects of leadership, including its meaning, challenges faced in IS development, various forms of leadership to assess which style suits the situation and also the way it has to deal with external influences.

Why Information Technology Systems Projects Fail

Despite the fact that primary focus has always been on successful IS developments, the literature is stuffed with various cases pertaining to IS breakdown (Oz and Sosik, 2000).

There are a number of editorials that present us with a detailed scrutiny of such illustrations. The starting point of any research is surveillance, which is either based on conventional presumptions such as self-justification and escalation theory or on the archives of similar assignments in past.

Whether it's general project risk or IS research risk, the spotlight has always been on the underlying factors that boost the chances of disappointment. Amongst other researchers, Barki, Rivard and Talbot's (1993) work is worth mentioning as their study of IS risk literature acknowledged five components that are related to project risk; one of these components being ineffective communication which was given the name of "Organizational environment." This is further accentuated by earlier study (Oz, 2000) where the significance of senior management involvement and effectual communication is backed up by practical examples. Hence, it appears that weak communication skills create a gap between different stakeholders of the project; making it difficult for them to comprehend the needs and requirements of other parties involved and results in the project being a dead duck. With all the attention given to communication, we should not overlook the additional contributor of a project's failure; incompetent leadership which is also termed as "Corporate management support"

Influences of Corporate Leadership

Corporate leadership revolves around the constituents that will smooth the progress of a particular project. It consists of three stages; Planning stage which takes into account setting of goals and objectives, Resource allocation falls into the second stage where one should prioritize its activities to ensure effective allocation of limited resources available, and the last stage being the implementation stage where senior management should also focus on conflict resolution along with dealing with technical issues involved. Therefore, the role of corporate leadership is essential to the success of IS project teams. A detailed analysis of the leadership function specifies that along with commencement of a project and its arrangement, contemplation of team member's requirements also fall into the scope of its responsibilities. When one talks about commencement of a project, it is implied that the overall work ethics will be considered. This will include the desired outcome of the project and how it can be achieved. It will also take into account the role of leader in the group and what is expected of him. On the contrary contemplation of team member's requirements points out the team leader's responsibilities towards his group. This means that the leader should be concerned about the professional and personal development of team members and ensure that their personal goals coincide with those of the project. Bass (1990) and Yukl (1998) have recapitulated a vast amount of practical illustrations on this matter which highlights that if leader is active rather than passive and fulfills these two roles with sincerity and commitment, the project will go up the ladder. In conjunction with the success of project, a dynamic and energetic leader will create a special bond between the team members and the project, such that personal goals of members are linked with the outcome of the project. The fact that members own the project can be used as an essential analyst of the progress of project. In this way, any variance in team's performance will be enlightened more than other indicators such as external communication and cohesiveness.

It is important to commune the aim of a project to its team members as it constitutes a vital part in the overall project progression. As mentioned above, it is the team leader's responsibility to commence a project and to inform group members of what is to be achieved and what is expected of team members in order to reach that goal. This removes any confusion in the minds of team members. Leadership has been an active subject for researchers. Stein and Heller (2002) combined various studies on leadership and communication theories and came to the conclusion that the attribute of leaders to clearly express the goals of a project is one of the many elements of task-related leadership. Oz and Sosik (2000) further confirmed this point arguing that if team leader is inactive, members will not be fully aware of the goals and the end result will be a disaster. Another earlier evaluation of this topic revealed that lively environment within the team is directly related to clear expression of goals. These theories contradicted with laissez-faire attitude of team, denoted by hushed communication and vague expectations (Oz, 2000).

The reasons that lead to a project's success or failure have been explained above. If these factors can be avoided at an initial stage, the success rates are likely to improve. Success of a project is facilitated by effectual project management practices. As evident from the word itself, project management services include all the tasks necessary to manage a project, and incorporates all aspects of project starting from the management of communication and the end point being to ensure project meets the required standards, is completed on time and all resources are utilized efficiently. Along with this, we should not forget the significance of communication within the team, as mentioned earlier, the articulation of goals and expectations is a key to success. To ensure that the project meets deadlines, mini deadlines can be set for each separate task and termed as milestone. Quality is the most important factor as it is directly related to customer satisfaction and repeated tests of systems and quality control checks can help to mitigate the risk of failure in this respect. Last but not the least, proper budgeting will take care of labor and overhead costs along with allocation of personnel, hardware and software equipment (Oz and Sosik, 2000)

As leadership influences all other facets of a project, it also affects project management practices adopted to ensure that objectives are met. For instance, effective research and development outcomes, team integration in IS project management and project modernization are all directly related to strong and competent leadership. Along with this, supervising of project and costs incurred is an important activity which cannot be completed by submissive and incompetent management. External environment is continually changing, and so are the factors influencing a project's success. In order to cope with the competitive environment, leaders should have the flexibility to change with circumstances and employ adequate skills to generate new and better ideas to improve the quality of the project with time. It is not possible for an inactive leader to be fully aware of the external environment and make contingency plans in order to meet the new challenges faced with each changing minute (Oz and Sosik, 2000).

Attitude of effective and strong management is to assist members of the team by seeking organizational support, making a suitable work plan to follow, to endow the team with all resources required at the best price available and to boost the confidence of the team as a whole. This further clears out the difference between active and passive leaders, as it is not possible for senior management to have this mind set. Corporate leaders are looked upon as idols by their subordinates and the way they handle the team and all team related issues set up examples for others to follow. The more time a leader spends with his team, the more he can ensure that there is a strong communication network and all problems are handled with professionalism. On the contrary, if a leader is unavailable most of the time, the overall morale of other team members will also go down. This is because they will feel that the leader is indifferent towards the team and their professional development. Also, an incompetent leader will fail to provide the team with all the resources they require, be it personnel, or any equipment necessary for project (Oz and Sosik, 2000).

Influences of Communication

As enlightened earlier, each project has a specific goal or objective to achieve and a team works together to achieve that goal. Therefore, for a project to be a success, its aim should be explicit, clear and understood by all team members. Normally, goals are set by senior management and then communicated down the hierarchy to the junior most people on the team. The way goals are expressed and the flow of communication symbolize the organizational structure and behavior of team members. For example, routine tasks such as senior-junior relation, job description, development methodology and hierarchy indicating who should report to whom are shown by the way expression of goals flow throughout the organization (Oz and Sosik, 2000).

A clear understanding of what is the preferred outcome facilitates a member to prioritize its tasks, discern the necessary actions to take and to assemble resources in order to undertake those steps. At an early stage, goals are easy to achieve. This provokes an inherent motivation in individuals and the performance of team improves by every minute. This motivation results in team members being truly committed to the project and to achieving its objectives; this commitment and hard work is an attribute of task-oriented culture and is termed as team work (Oz and Sosik, 2000).

Team synergy and timely conflict resolution between different team members is an active contributor to a project's success. Lack of communication within the team will result in members having vague ideas about the objectives of the project or each other. With each person thinking differently, unnecessary meetings are held to resolve the conflicts, taking up extra time and delaying the project. As majority of time is spent on conflict resolution, other important areas such as quality control and adoption of best practices are ignored which causes majority of the IS and IT projects to fail as well. Hence effective and lucid communication is a vital aspect for success (Oz and Sosik, 2000). Some of the other factors needed for IT projects success include:

Inadequate Skills and Means

Teams should have the right balance of skills and knowledge required to make a project successful. Research suggests that if the team members do not have the necessary skills and knowledge, this can create disturbance in work as the person might take two or three tries to get it right. This will cause unnecessary delay and waste of resources (Oz and Sosik, 2000).

Project Leadership

A leader is supposed to be an idol for team members to follow. He has a vision, a dream to achieve a particular objective, and takes into account all internal and external influences that can hinder its achievement. The process by which he gathers resources, including personnel, and makes them all work towards the same goal is termed as "Leadership" (Barry, 2005).

Managing the Change Process

Change is a vital part of any project. It cannot be overlooked; every leader has to deal with it. Environment changes constantly, and all these changes affect the project; some in good way and some in bad, some changes have a greater impact while others can go unnoticed. Mostly, people are opposed to change, as it influences their normal routine. However, if the organization has to survive in the long run, it will have to accept change, no matter how unwilling they are to do so. Impact of change on an IS project can be determined by its extent and the stage at which it hits the project. At initial stage of a project, senior management will deal with it. Any opposition by leaders at this stage is referred to as strategic IS resistance. After it has been resolved, the friction slides down to the business units and its name changes to Tactical resistance. It is tackled through training sessions and counseling. Once resolved, the contention moves down to the junior staff and is now termed as operational resistance. No matter at what stage it is, it has to be dealt with and only leadership style suitable for the organization considering its culture and attitude of people can handle this issue.

Leadership and Change

It is asserted by Schein (1996) that an organization is divided into sub-cultures. The sub-cultures vary from each other in a number of ways and therefore are not integrated. In this situation, it is nearly impossible to bring change in an organization. Barnett and Pratt (2000), on the other hand, emphasize on the social view of change. They advocate that managers use a foreseen calamity to encourage people to change. According to their work, members will unite and work towards the betterment of organization and in this process they will take any step to avoid the approaching crisis. In relation to this theory, Cohen et al. (2004) highlights the attitude of staff towards change and crisis i.e. If a problem stays for longer time period, members will then move to charismatic style of leadership; this is because at that point they want someone to lead them in the right direction, removes all their worries with a flick of a wand and give hope about better future. If examined carefully, these theories can prove to be useful for a project's success.

Leadership Style in Global IT Projects

Globalization has affected each and every aspect of business world, so its influence on IS/IT development and related leadership styles is no surprise.

All countries have different cultures, different work ethics and therefore different leadership requirements. This is confirmed by research work carried out in last 25 years that leadership style favored in one country will not be preferred in another. (House et al., 2004) Where there is a power culture, and people prefer playing safe, i.e. they avoid taking risks, charismatic leadership style can do wonders. On the contrary, where more emphasis is given on team works and projects, task - oriented culture will be preferred.

Now, as two or more countries with different cultures come together for a single project, or when a project is expanded into other countries with head office being at the original location, it becomes even more complicated to choose the most appropriate leadership style.

The Challenge

As evident from the intricacies mentioned above, the matter of leadership style is an interesting topic for researchers and should be highlighted more in global information technology management. Although researchers have done a great job and tried to cover each facet of this area, there are still some loopholes in it. The most important one being the effect of globalization on IS development and the fact that companies cannot limit their activities to one region just to avoid the complexities. The issues raised due to differences in cultures cannot be left unanswered and should be given priority.