Why do IT projects fail?

Today no one can imagine running a business without information technology. Business has a love affair with technology demonstrated by the amount of money spent on IT projects. According to Standish Group’s Chaos report, small businesses (revenues between $100 million to $200 million) spent an average of $434,000 on IT projects while large businesses (revenues over $500 million) spent an average of $2.3 million on IT projects in 2014. In total, American business spent an estimated total of $250 billion on about 175,000 IT projects.

However, statistics show that only 16 percent of the projects were successful in delivering all functional and feature requirements on time and on budget. Over 30 percent of the projects were cancelled: they never survived to deliver any useful functionality. Over 52 percent of the projects faced challenges delivering their specifications on time and on budget.

Why do IT projects fail in spite of the fact that businesses invest heavily in these projects and they are generally run by intelligent and capable professionals? More importantly, what can we learn from these failures?

Close examination of the statistics provided by the Standish Group’s report offers some clues and valuable lessons. The three pie charts below show the success/failure factors of the three categories of IT projects:

1. Cancelled projects—these are the projects that never survived

2. Challenged projects—these are projects that either went into overtime, over budget or failed to deliver all specifications

3. Successful projects—these are projects that delivered all specification on time and on budget

  • User input
  • Requirement gathering
  • Executive support
  • Resource availability
  • Planning
  • Expectations
  • Competency

From the distribution of the graphs, it is clear that if we can manage the first three factors well, we can increase a project’s success rate by at least 40 percent. If we can successfully manage all seven factors, we can increase the success rate by over 60 percent.

IT projects fail and will continue to fail. Without failure, there would be no success. Technology has grown leaps and bounds in the past 20 years thanks to a whole generation of professionals taking chances and making mistakes. What we learn from our mistakes will help us grow and eventually succeed.

For more information on this topic, or to learn how Baker Tilly energy and utility specialists can help, contact our team.