The chances of large information technology IT projects being successful are even more depressing than the divorce statistics. While six out of every ten 10 British couples tying the knot can hope to stay married, it is estimated that only about 50 per cent of IT projects will come in on budget, and only about 10 per cent will finish on time. In the worst cases, IT projects fail spectacularly, causing more expense and reputational damage than a trip through the divorce courts.
However, estranged clients and providers are now bringing in a new breed of consultant – likened to a marriage guidance counsellor – to help resolve conflicts and put errant projects back on track.
There is no shortage of strife-ridden IT projects. Consider the tax credit project at the UK’s Inland Revenue. The failures of the new system became a humiliation for the British government earlier this year when it emerged that the system had caused nearly 2m people to be overpaid £2bn ($3.6bn) in tax credits.
Electronic Data Systems was originally hired for the project but problems with the contract became so great that, in December 2003, the Inland Revenue sacked the Texas-based IT integrator and awarded the contract to a consortium including Capgemini, Fujitsu and BT Group. Revenue is now also considering suing EDS.
Both sides blame each other for the failure. EDS claims the Inland Revenue kept changing its mind after the project started and says the overpayments were the result of the Inland Revenue failing to implement policy correctly, rather than a failure of the system.
To try to prevent a similar relationship breakdown, there is now an increasing trend for companies and IT service providers are calling on the services of third-party advisors for their projects – smaller, third-party consultancies, who can help set up the contract and make sure all parties remain in agreement. as it progresses.keep the project on track once it has begun.
“You can call us marriage counsellors,” says Bob Fawthrop, chief executive of Morgan Chambers, an outsourcing advisory firmcompany. “When a relationship breaks down, it is never totally one party’s fault. It is usually a case of people misunderstanding each other. A third party can come in with a more objective view.”
Sometimes, to ensure the advice is truly impartial, the client and IT contractor will share advisory fees.
“Ten years ago contracts would merely say that mediation on any contract disputes would be escalated to senior management,” says Ivor Canavan, European vice-president of the EMEA????operations of at Computer Sciences Corporation, an IT services company.
“Now, companies are often nominating a third-party mediator from the start. There is more of an expectation that things can get out of shape and companies are putting in place measures to ensure they can resolve problems quickly,” he says.
Mr Fawthrop says Morgan Chambers is being called in frequently called in to help companies write contracts with their IT suppliers and to mediate when problems arise or the terms of the project need to be changed. The company had about 100 engagements last year and demand is growing at around 25 per cent each quarter.
As well as advising on setting up projects, small consultancy companies are also being called in to oversee them as they progress. “A lot of projects fail because the parties have different agendas,” says Alistair Clifford-Jones, chief executive of Leadent, an privately-owned Oxfordshire-based consultancy that does this kind of IT project work.
“At the start of an IT project all players are aligned, but as the project continues they have different agendas. Systems integrators may want to make more changes to a project because they make money out of changes. The client may not deliver everything it is supposed to and the company circumstances might change,” Mr Clifford-Jones says. “Leadent’s job is to keep everyone on track.”
“There is a consulting revolution going on where clients are fed up with the inefficiency and high fees of the big accountancy and consulting companies. Clients have had enough of are fed up with cost and failure, and the hidden agendas.” he says. “ People are starting to accept that there needs to be a level of independence driving the project.”
A small company that only started operations three years ago, Leadent is already seeing rapid growth, with revenues increasing by 300 per cent a year, and the company is looking to more than double the 22 consultants it has on its books by the end of the year. It has already found itself playing a key worked on a number of projects worth tens of millions of pounds, with customers such as Threshers, the off-licence chain, Whitbread, the leisure group, and Anglian Water, the utility.
Sometimes Leadent consultants have been parachuted in to turn round a project that has already run into trouble. But increasingly they are being included at the start. Anglian Water brought in the company as an overseer when it began to plan the launch of a mobile computing system for its workers.
“All of Anglian Water’s IT has been outsourced to CSC 10 years ago. This works very well for ordinary things – more standard IT applications and back-office processing,” says Paul Vallely, programme manager at Anglian Waterthe utility. “But rolling out mobile field services is a new project for both CSC and Anglian Water, and we needed a specialist.”
Mr Vallely says he believes Leadent provides a good counterview to CSC on the requirements of the project. “Its not that we need them to keep CSC honest at a management level. We have a good relationship with CSC,” says Mr Vallely. “But on a technology level it is good that they can say what is feasible to expect CSC to do, and in what time scale. Leadent are making sure that CSC delivers the specification on time and to cost. They bring in that realism that both sides benefit from.”
At the same time as keeping the IT integrators on track, Mr Clifford-Jones says Leadent is also able to flag up problems with the client company more effectively because it is considered to be independent. “Clients take Leadent’s advice seriously because they know the guys aren’t there to sell more work,” he says.I can usually get in front of board members within 24 hours if I need to.”
So far, on the Anglian project, the “marriage counselling” approach appears to be producing results. The project is expected to finish on schedule next year and at this point is estimated to be running 15 per cent below budget.
With a little outside help, it seems, technology providers and their clients can look forward to a long and happy union.
“I’m not sure we would have achieved what we have as fast as we have without Leadent pushing the project forward,” Mr Vallely says.
THE MYRIAD REASONS WHY TECH PROJECTS ARE PRONE TO FAILURE
Terms are poorly specified. Often the project contract is set up ambiguously, so that it is not clear to both parties what needs to be achieved. Agreements on the level of service, for example, may be too vague, says Bob Fawthrop of Morgan Chambers, a UK consultancy. Companies might set a blanket requirement for computer systems to be available 99 per cent of the time. In fact, there may be critical systems such as billing that have to be functioning 100 per cent of the time; while other, less crucial systems could survive with more downtime. The IT provider could be hitting all its targets, but still not satisfying the client.
Project management goes awry. Good contract management is not just about agreeing the right terms: the project has to be actively managed at every stage to make sure that both sides remain in accord over big milestones and any changes to the timetable.
The parties lose sight of the original objectives. Morgan Chambers says this is particularly easy to do: the employees who set up an IT project will on average have left the company within 14 months of its starting, while the IT project itself may go on for three to four years.
Circumstances change. If the client’s business changes dramatically the IT project also needs to be reviewed. If this does not happen, the completed IT system may no longer be what the company wants. Leadent, a consultancy, updates a report on the expected outcomes of a project every month to reflect changing circumstances.