The percentage of information system (IS) failure is very high. Almost 25 percent of the projects undertaken fails (Keil, Mann, & Rai, 2000). A project is said to have failed when the project budget overruns by 30 percent or more, the project schedule is overrun by 30 percent or more, and/or the project was canceled or deferred due to its inability to demonstrate or deliver the planned benefits (Whittaker, 1999). There are different reasons why projects fail. But four main reasons for project failure are inadequate project planning, a weak business case, lack of management/leadership support, and complacency in organizations which prevents them from learning and/or accepting the new system.
KPMG (KPMG, 1997) survey of unsuccessful projects revealed that the primary reasons for project management failures are:
- Poor project planning: This implies inadequate risk management and a weak project plan. Risk management assumes priority as the organization under consideration is bigger.
- A weak business case: The necessity for the information system should be justified in relation to direct business requirements.
- Lack of top management involvement and support: This deficiency in a project environment often marks the failure of projects. Securing buy-in from the top, often by a strong business case backed up with a realistic project plan, is an essential step.
This survey found a few other reasons which were responsible for project failures, they are:
- Projects fail more often because of schedule overruns than budget overruns.
- Many projects fail because they use new or unproven technology.
- Poor estimates or weak definitions of requirements at the project planning stage also contribute to project failure.
- Projects can run into trouble due to the vendors’ inability to meet commitments.
- Of the failed projects, 60 percent were planned to take less than one year to complete. (KPMG, 1997)
Apart from this, a fourth point that has been revealed by various studies is the reluctance of organizations to change and learn (Whittaker, 1999; Lyytinen & Robey, 1999). According to Whittkar (1999) is that a project canceled or deferred due to a 30% cost or time overrun is considered to have failed. Lyytinen and Robey (1999) list four software project failure ‘modes’ (as distinct from underlying ‘causes’), where failure is defined as non-completion of a project.
- The cost of production can go exponential before release due to the building up of a major situation or a sudden, unforeseen event. This leads to non-completion due to the negative ROI.
- The ‘90% done’ outcome results from the deferment of risk items, which prove too difficult to resolve, until later in a project.
- Endless QA results from an ever-increasing number of quality issues during development.
- Version 2 failures can result from unsuccessfully attempting extension to a poor original design which does not readily support further development. (Lyytinen & Robey, 1999)
Lack of Planning
The most important reason for project failures is poor planning (Whittaker, 1999). The lack of a clear project definition and plan is basic neglect of responsibility on the Project Manager’s part, usually to the major detriment of the project. In addition, this must be accompanied by ongoing revision as required as almost inevitable time, scope, cost, or quality slippages occur. These revisions must also be managed in order to maintain the controlled change of the baseline. Whittaker (1999)described the failure of the planning process in two phases:
First, risks were not addressed as part of the project planning process. Their study revealed that:
- Slippage from the schedule
- Change in scope of technology, functionality, or business case
- Cost overruns associated with one or more project components
- Change in any key individuals such as the business sponsor, project manager, or vendor manager. (Whittaker, 1999)
Second, the plan was weak. The four most common deficiencies in project plans are:
- Incorrectly estimated activity durations
- Incorrect assumptions regarding resource availability
- Inadequate assignment of activity accountabilities
- Missing or incomplete review and approval activities (Whittaker, 1999)
According to the Standish Group report (1999), the project manager should be the “gatekeeper” so that he or she can plan the functioning of the project in detail. Further, the manager needs to be able to keep the group and the plan of the project focused on the required area rather than letting it divert to different ideas (Standish Group, 1999).
A Weak Business Case
A weak business case was the second most common reason for project failure. The business case was most likely to be weak in or missing. The reasons as was demonstrated through their study were:
- Business and operational changes needed to deliver the benefits
- Clearly understood deliverables
- Quantified costs and benefits
- The overall scope of the project
- Business and technology risks
Project managers must act as a linking gate between the technology and the business (Standish Group, 1999). The project manager needs to evaluate each and every feature of the information systems in terms of the value and benefit that it would provide to the business and evaluate the resources and the risk factors associated (Standish Group, 1999).