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The ERP devil's triangle
IT failure arises from core dynamics between enterprise software sellers, buyers, and third-party consultants and integrators. The ERP devil's triangle describes how conflicting agendas and cross-linked goals cause failures.... Continued »
August 15th, 2008
Implementation complexity enables higher software prices
According to an interesting post in CIO Magazine, recent price increases by both SAP and Oracle were made possible by implementation complexity and the difficulty of replacing existing systems.
CIO explains:
[O]ne of the complaints customers have about these products is the huge implementation costs of putting them in. Said a different way, they’re so complex that very few companies can afford to take on the cost of getting them installed and working. Consequently, reducing prices on the software probably wouldn’t grow the customer base, because most companies can’t afford the total cost of owning them.
In other words, enterprise software customers believe they have few choices and therefore willingly pay whatever vendors ask. For their part, software suppliers are aware of this dynamic and take full advantage of their incumbent position.
It’s a one-sided perspective but compelling nonetheless.
[Image via Univ. of Warwick]
August 14th, 2008
SAP: Transparent SME ‘deep dive’
Following it’s Business Objects Influencer Summit, SAP held a small and medium enterprise “deep dive” event for bloggers, analysts, and press. Both SAP’s strategy and the company’s openness were impressive.
SME portfolio strategy. Jeff Stiles, SAP’s Senior Vice President for SAP SME Solution Marketing, articulated a coherent product offering that segments the market along several dimensions:
- Customer size
- Business and organizational complexity
- Growth rate and trajectory
- IT infrastructure capability
- Preference for on-premise vs. software as a service (SaaS) solutions
In a follow-up email, Jeff commented:
The other thing that should be considered is how an organization competes (do they need to deeply customize the solution to fit their unique needs?)
SAP’s offering to the SME market consists of the following:
Business One: SAP’s product for “small businesses that have outgrown their accounting only applications.” Appropriate customers will generally be under 100 employees with 30 users.
Business byDesign: SaaS offering for “fast-growing midsize companies, with limited software & systems, that don’t want to build a large IT backbone.” While the target market for byDesign appears to overlap Business One and All-in-One, the hosted aspect is one strong point of differentiation.
All-in-One: Aimed at “mid-size companies looking for a solution that meets their demanding industry requirements and helps grow and scale the business.” This product can handle much of the business complexity addressed by SAP’s large enterprise suite, but is designed for smaller companies.
The following graphic summarizes these points (adapted from an SAP-supplied slide):
The clarity and quality of SAP’s SME strategy has come a long way over the past several years. As Dennis Howlett commented on Business One:
My past experience with BusinessOne is of a solution that was relatively stagnant in the market, of less than competitive functionality and suffering from performance issues. That was two years ago. Today, the product is improved from every angle. Performance has been beefed up significantly, quality has improved but most important, smart VARs have figured the current iteration provides a genuinely viable alternative to Microsoft products.
Implementation innovations. From a project failures perspective, I want to highlight the SAP Best Practices component of All-in-One. Rooted in work started in the mid-1990s by SAP’s Simplification Group, SAP Best Practices advances the implementation state of the art.
Here’s SAP’s slide on this topic:
In my view, productizing knowledge represents one of the best opportunities for reducing software implementation time and expense. On a directly related note, I also believe that packaged services will ultimately form the basis for all but the most complex implementation consulting efforts across the enterprise software industry.
Software vendors and consultants can improve implementation efficiency through standardized implementation road maps, structured pre-configuration analysis, and consistent information sharing from pre-sales through go-live. However, given the organizational complexity around selling and deploying enterprise software, combined with technical configuration challenges, achieving these goals has been elusive.
It’s worth mentioning that some third-party consultants and system integrators resist implementation efficiency because it reduces billable hours. Although many consultants hate failure, I believe third-party billing churn continues to be consulting’s dirty little secret.
Although I haven’t spoken with SAP customers about specific Best Practices-based implementations, both concept and presentation pass the smell test. [Disclosure: For many years, starting in 1996, my company was deeply involved in developing the first generations of SAP’s rapid implementation tools. I have no such relationship with SAP at present.]
What’s missing. While SAP’s small and medium enterprise positioning has become crisper over time, several points remain confusing:
- The positioning still needs additional focus and clarification. For example, overlaps between byDesign and and the other products need further definition. In addition, the line between All-in-One and the larger Business Suite product remains somewhat fuzzy.
- SAP’s statement of long-term commitment to byDesign needs reinforcement. Changes in byDesign’s product release strategy, combined with the company’s historical large enterprise focus, could make potential customers skittish about adopting this offering. If SAP is serious about byDesign, it must put a definite stake in the ground and make clear its intention to remain solidly behind this product for the long haul.
Transparency and openness. The SME deep dive raises the bar on communications by enterprise software vendors. Led by Jeff Stiles, SAP executives, partners, and customers accepted challenging questions from the small audience (30 people). To his credit, Jeff allowed the full-day schedule to drift based on audience interest in particular topics. While many of the questions were tough and analytical, the answers were straightforward and reflected confidence in the offerings.
SAP blogging. Many of the day’s most insightful questions came from Enterprise Irregulars attending as guests of SAP’s blogger outreach initiative: Vinnie Mirchandani, Dennis Howlett, Brian Sommer, Sandy Kemsley, and myself. Run by SAP’s Mike Prosceno and Stacey Fish, the program offers bloggers unprecedented access to SAP senior executives and information. With this program, SAP sets the enterprise software standard in providing transparency to bloggers.
Note to other enterprise software companies: transparency is a sign of confidence and demonstrates you have nothing to hide. Let’s see you step up and meet the openness challenge.
August 12th, 2008
SAP Business Objects Influencer Summit: Strategy to execution
SAP is presenting the Business Objects Influencer Summit, an invitation-only event being held today in Boston. “Strategy to execution” is a key theme across the many numerous presentations.
The following diagram gives an overview of this concept. Note the role of insight as driver for making smart business decisions:
Drilling down further, SAP fleshes out the linkage between an organization’s underlying business strategy and the operational steps required to execute business decisions:
Robert Kaplan, guiding light behind both activity-based costing and the balanced scorecard concept, provided professorial gravitas:
Kaplan offered his perspective on the strategy to execution concept, which he calls as “linking strategy and operations.” Although cut off from the image, Kaplan presents five steps, starting from the upper-right and proceeding counter-clockwise:
Another key theme is crossing “the information divide.” Through Business Objects, SAP seeks to extend its reach across both technical and non-technical users:
These themes sound great at a high-level but the devil is in the details. I’m particularly looking forward to learning how these concepts carry forth to IT execution and reducing rates of IT project failure.
For a more…pointed…perspective, see Dennis Howlett’s comments on today’s Summit.
[To see more presentation pictures click here.]
June 21st, 2008
Social project management?
Joe Thornley blogs about an Enterprise 2.0 conference presentation, by Leisa Reichelt, that discusses “social project management.” The premise centers on using social media — presumably wikis, blogs, and the like — to enhance connectedness among project participants, thereby reducing the rate of project failures.
Joe lists attributes of traditional projects:
- Top down: an extensive hierarchy with information trickling down. But getting the information back up is difficult.
- Gantt Charts: The bigger, the uglier, the better. Reichelt notes that these are enormously optimistic. How often do they have any resemblance to reality?
- Many stakeholders: The project manager seeks out all of the stakeholders and the stakeholders put in as many requests as they possibly can. One problem of project management is that too often it seeks to satisfy stakeholders. This is different from satisfying end users.
- Complex dependencies: Escalating demands leads to complexities which leads to delays.
- Risk registers: !
- Horizon & beyond timelines: Planning a project now that will be useful and realistic in 18 months. How often does this really work?
- Expected failure: This kills team morale. But is it all too common.
He also describes smaller, social projects:
- Small teams: a developer, a designer and a sweeper.
- Made up of smart, motivated people.
- Limited planning. Non-essential documentation and highly detailed specification are dispensed with. Sketching and agreement on fundamentals are the focus.
- Minimal scope: Less is more. Build less.
- Multi-skilled teams: Look for people with multi-disciplinary skills.
- Fast pace: Speed is essential to produce results within a limited budget.
- Rapid release: Take it out to the community quickly and ask them to participate in alpha and beta testing.
- Feedback: End user feedback is sought to refine the product.
- Responsiveness: Speed and close contact with users leads to quick reaction to feedback.
- Iteration: Constant change.
Since projects fail primarily due to non-technical causes, any tools and methodologies that encourage better management and communication are bound to help. Still, as Joe correctly points out, the social project management approach breaks down on large projects.
Although social media offers no panacea to the problem of failed projects, managers should keep an open mind. Social media does show promise to substantively assist project management, although it’s still too early in the lifecycle to know where the real benefits will emerge.
April 28th, 2008
SAP’s CTO: Business knows ‘what’, IT knows ‘how’
The Naked IT interview series talks with innovators about the evolving relationship between IT and business. Please listen to the audio podcast and enjoy the brief excerpts below.
Vishal Sikka is SAP’s Chief Technology Officer. Reporting directly to CEO Henning Kagermann, Vishal is responsible for driving technology and architecture strategy across SAP’s product portfolio. As CTO, Vishal also leads the company’s forward-thinking efforts around emerging technologies and is responsible for mapping SAP’s next-generation architecture. He holds a Ph.D. degree in computer science from Stanford University and his experience includes research in automatic programming, information and application integration, and artificial intelligence at Stanford, Xerox Palo Alto Labs and two startups.
Vishal and I spoke about a broad range of enterprise software issues, including his role as CTO of SAP, service-oriented architecture (SOA), relationships between business and technical organizations in the enterprise, IT project failures, SAP’s acquisition of Business Objects, and Business byDesign.
If you’re interested in CIO or CTO issues, give the podcast a careful listen; it’s well worth your time and attention!
On being CTO:
My primary job is to define and articulate the roadmap for our products and technology, bringing coherence and uniformity to the way we govern our architecture and over-arching product design.
On packaged applications:
The basic idea of a packaged application is one size fits all, serving a wide variety of customers. You get economies of scale from packaging that application, functionality, and so forth….Having a packaged application suite that simultaneously fills the need across that broad diversity of industry, country, nature of business…is a very, very difficult problem. There have been generations of companies that have tried to do this and failed. Simultaneously reaching for breadth, depth, and ease of use killed these other companies.
On IT / business alignment:
Lines of business know the what and IT knows the how. Companies in which this “what / how” distinction is broken tend to have difficulties. You have to empower the lines of business and the IT guys….trusting the IT guys know the how and lines of business can articulate the what….The business [should] tell IT the nature of the problem to solve; IT [should] then bring in tools and platforms to [address them].
You [develop] strategic IT by bringing the line of business and the IT guys together to the table [with] mutual respect and empowerment.
On IT extinction:
That is just nonsense.
On reducing IT failures with enterprise SOA:
[SAP combines] IT simplification (technical visibility) with business transformation. Implementation maps [along with] the enterprise services repository and its process capabilities…help get solutions get adopted very quickly [and with lower risk]. The services repository gives [stakeholders] a very public and visible way of seeing how their business relates to the software.
[Stakeholders] can also [share] with other business process experts to get a sense of what others are doing, which Hasso [Plattner], our founder, refers to as “doing business with an open window.” Seeing what other people have done, sharing experiences, [provides] extra visibility into [how the software relates] to the business, making the entire process much more seamless, and reducing project failure.
On the Business Objects acquisition:
We closed the strategy to execution loop, which CEOs , CFOs, CIOs, and heads of operations are badly missing….Closing that loop between strategy and execution is something that Business Objects really enables us to do.
The user-centric and the information-centric aspects are fundamental….We want to be in activities that business users [perform]; that are not directly operational, but informational, in nature. We are going to get there faster than any of the other guys.
On innovation in enterprise software:
If you have applications that serve core business processes and live for ten or fifteen years, how do you bring innovation that is non-disruptive to customers? We deliver innovation in consumable packages twice a year in enhancement packs, which also include technology improvements; this is a non-disruptive roadmap for [customers] to continuously innovate. [It’s] a mechanism for delivering innovation while preserving stability; of delivering insight while preserving execution.
On Business byDesign:
Salesforce.com talks about adapting and so forth, but doesn’t cover even a tiny fraction of the breadth of [SAP’s product suite]. On-demand to us is an interesting delivery mechanism…. [However, Business byDesign represents] a more profound shift….
A few years ago we launched an effort to rethink how we build the core software;…it was our generational look at what has to happen inside the core processes. Business byDesign is our mid-market delivery of that vision…It represents a fundamentally modular way of building software that no one in the industry has ever dreamed of building. It is designed for the mid-market but has implications beyond that.
March 5th, 2008
Reducing IT failures with project portfolio management
Project portfolio management (PPM) vendors claim their tools give organizations more control over IT projects, create stronger alignment between business goals and IT operations, and reduce project failure rates. To evaluate these promises, and to determine whether PPM can really keep project ducks in a row, I attended a briefing by HP, which offers the Project and Portfolio Management Center PPM suite.
From an IT failures perspective, PPM brings discipline to four key areas:
- Standardizing the investment criteria used to evaluate project funding. PPM requires an organization to define the requirements against which it will prioritize and measure all projects. The business case used for evaluating new project investments should include financial metrics, describe acceptable levels of operating risk, define ROI expectations, and so on.
- Making project-related investments explicit. PPM establishes a project inventory process through which organizations can track all existing and future IT investments. This reduces the number of unauthorized, “shadow” projects and ensures all projects are fully budgeted before starting.
- Prioritizing projects across the enterprise. PPM helps IT departments prioritize projects based on “fit” with company business goals, financial requirements, and risk tolerance. Project fit is determined when prospective projects are compared with the organization’s investment criteria and policies, as described above in the first bullet.
- Providing a way to measure project success, relative to organizational investment policies. By putting explicit tools and processes in place, PPM makes it easier for IT to track project success and failure. Tracking results means it’s easier to improve over time.
PPM helps organizations use well-defined criteria, rather than ad hoc guesses, when deciding which projects to fund. Dennis Gaughan, Research Director at AMR and one of the briefing presenters, told me in a follow-up conversation:
Without PPM, many organizations make project investment decisions based on whoever screams the loudest or is most politically well-connected, irrespective of what’s best for the organization. As a result, many projects are funded that should not have been. PPM offers a reference methodology against which these projects can be evaluated objectively, thus avoiding bad investments.
THE PROJECT FAILURES ANALYSIS
In my opinion, PPM offers an effective vehicle for helping organizations institute rigor, discipline, and maturity into IT investment decisions and operating processes. By explicitly making IT funding decisions rational and transparent, PPM systems can bring IT closer to the business, which alone will improve project success rates. From an operations perspective, tracking and measuring projects against pre-defined business metrics would certainly help stop small problems from becoming large failures.
On the other hand, PPM is not a silver bullet for preventing IT failures. PPM tools cannot replace substantive organizational and executive commitment to doing IT right. Nonetheless, organizations committed to reducing IT failures, increasing the value of IT, and enhancing IT’s credibility will find PPM a worthwhile investment.
[Thanks to Erin Muhlhan from Burson-Marsteller]
January 20th, 2008
Update: Los Angeles schools’ payroll problems “stabilized”
The Los Angeles Unified School District (LAUSD) seems to have ended it’s year-long payroll system failure. For most of the last year, many teachers have faced incorrect paychecks resulting from problems during the implementation of an SAP system.
According to the Daily News in Los Angeles:
Errors due to defects in the system were below 1 percent based on Thursday’s payroll numbers, meaning 99.2 percent of the district’s employees were paid accurately, said Dave Holmquist, LAUSD’s interim chief operating officer.
That’s down from a 1.27 percent error rate in December and 2.97 percent in November.
Also, the number of people coming in to the payroll center with paycheck problems has dropped substantially - to 119 so far this month compared with 759 in November and 237 in December.
“We’re under 1 percent … which was one of the goals we had … and we’re hoping to improve upon this,” Holmquist said. “The goal was three consecutive, improving, reliable payrolls, and we believe we’ve reached a place of stability in our payroll.
“We’re nearing an end to our crisis.”
The human toll on teachers has been extreme, so I’m glad system errors have finally come down to a manageable level. I believe the problem was rooted in a combination of arcane union work rules together with poor project management by Deloitte & Touche, the implementation firm:
“We’re hoping to get this resolved through a negotiated settlement,” Holmquist said. “We don’t want to have to sue. We’re not sure it’s the best way to spend tax dollars.”
But Assemblyman Kevin de Leon, D-Los Angeles, who introduced legislation Monday prompted by the LAUSD payroll fiasco, has said he will push the district to recover lost money from Deloitte through a lawsuit or negotiated settlement.
Both sides were most likely at fault here. Still, the project is estimated to be almost $40 million over-budget (original plan: $95 million). That’s far too much and Deloitte should demonstrate it’s own skin in the game, by giving up some of its “ill-gotten” profit.
Note to LAUSD: I suggest you push Deloitte hard on this. Dig deep into actual costs they incurred, but watch out for “Hollywood accounting,” where they bring overhead into real costs, reducing apparent profitability. However, remember your folks also played a role creating the problems, so be fair and reasonable with Deloitte while you dig into their finances. Deloitte is hardly blameless, but LAUSD’s program management also fell short of the mark.
January 9th, 2008
Naked IT: Shel Israel on social media and IT (includes podcast)
The Naked IT interview series talks with innovators about the evolving relationship between IT and business. Please listen to the audio podcast and read this blog post for additional analysis not included in the recording.
In this segment, we talk with Shel Israel, co-author (with Robert Scoble) of Naked Conversations, an influential book describing the impact of blogs on the business world. Shel’s work covers how social media is changing the way the enterprise interacts with its markets and other constituencies.
Shel is currently exploring the role of social media in society through an interview project called Global Neighborhoods, which SAP is sponsoring. I asked Shel to describe the project’s goals:
[To learn] what’s really going on, in the world, regarding social media in culture and social media in business. Why culture? Because whatever happens to culture will shape the business that’s done there….Instead of trying to aggregate a lot of statistics and put them on a spreadsheet, the assignment was to go out and speak to people, wherever I could find them, who have something interesting to say about their culture, wherever it is.
Changes at the intersection of technology and culture have hit the enterprise in the form of social media. As the interview describes, the ramifications across both technical and business domains are substantial. While these changes are still nascent, they portend a larger evolution. Shel Israel’s work on Global Neighborhoods suggests what that future may look like.
Why social media matters
One major theme stood out during the entire discussion with Shel: social media achieves its goals by removing layers between two parties involved in communication:
The fewer intermediaries the more efficient everything is…If the guy who makes something can talk to the person who uses it, it’s very efficient. If you save all that money, you can use that money to:
A. Reward the investors better
B. Make better products, and
C. Retain a good deal of cash because your margin is up
My take: This view implies that communication is a “transaction” where efficiency and directness are critical values. While certainly true in many instances, there are times when organizations, for a variety of reasons, deliberately insert intermediaries into the dialog with external constituencies. Right or wrong, entire corporate departments are dedicated to carefully shaping corporate marketing and policy messages.
Public relations, corporate communications, and investor relations are several examples where the need for enterprise control generally trumps the free and spontaneous flow of information. As social media slowly makes inroads into the enterprise, new models will incorporate “layer-free communications” within existing corporate structures. However, those days certainly aren’t here yet.
Social media and the enterprise
Social media is often considered in light of tools such as Twitter, Seesmic, and other enterprise 2.0 products. Comments from some people in the enterprise suggest such that such tools are tangential, serving more as entertainment than serious supports to business.
Shel offered his view on the implications of social media for the enterprise, based on the fifty interviews he has conducted to date for the Global Neighborhoods project:
If you know that suppression is increasing in Egypt, that women are being forced to wear a burqa over what is secretly probably blue jeans and high heels underneath; if you know that technology is seen as a cultural corrupter, then it will impact how you plan to do business in Egypt.
If you know that Ethan, a 17-year high schooler in western Connecticut, [will only work for a company that trusts him enough to allow him to blog], this would tell a company like SAP that in the future, the best and brightest of the next generation coming into the workplace, is going to want to use social media tools to do their jobs.
Large organizations, that want to be in touch with their constituencies, need to use social media more effectively…and with their employees as well….[For example,] they better use social media in recruitment. Craigslist isn’t going to do it for the next generation.
My take: The great debate regarding the value of social media tools in the enterprise is going strong. The Global Neighborhood interviews point toward the future, to a time when the enterprise embraces social media as a mechanism to enhance communications. However, that time has not yet arrived, and for the moment, social media remains an interesting curiosity for most large enterprises. On the other hand, forward-thinking organizations are studying how to integrate social media, minimizing disruption wherever possible, to gain its benefits.
Social Media and IT
Shel takes a compassionate, but hard-nosed, view of IT. I asked for his views on IT failure, particularly in regard to social media projects:
IT is told to do something in a ridiculously short time, without budget, without human resources, dealing with technology that is not yet bulletproof for enterprise use. Social media, by its definition, goes in and out of the protections of a firewall with glee and freedom. These are all huge problems for IT.
Social media removes centralized control for the most part, and empowers individuals to do what they want directly.
The IT guy is someone my heart goes out to, because he’s got an extremely difficult job. People who he reports to see him as a cog in progress and a drain of money; the people he’s supposed to serve see him as a bottleneck….
Given these comments, what is an appropriate role for IT, with respect to social media?
IT sometimes put in the position of being expected to make something happen when they are not needed….Does IT [even] have a role making social media happen at the central level?
I pointed out that that some people might view this position as “dangerous”:
Yes, treason is a word that comes up.
My take: Shel believes there is little role for IT in deploying social media, aside from maintaining whatever network infrastructure is needed to run the software. From his perspective, a primary benefit of social media is reducing centralized control over systems and communications, which is of course heresy from some points of view.
Many IT departments have already discovered users adopting social media tools, perhaps bypassing corporate policies in the process. As social media proliferates through the enterprise due to grassroots downloading, IT will increasingly see the erosion of its ability to function as technical gatekeeper. Making matters worse, anti-social media policies are likely to fail, as new technologies enable users to take matters into their own hands.
If you manage an IT department and want to succeed with social media, take the following steps:
- Conduct an honest assessment of the extent to which social media is already being used in your organization. The results will suggest how urgent the issue is for your company.
- Ask users what they hope to accomplish with social media and why it’s important to them.
- Determine the technical challenges, and related solutions, involved with supporting social media within the context of your environment, policies, and infrastructure.
Engage users in dialog and your IT department will become a leader in the new world of social media software.
December 7th, 2007
New IT project failure metrics: is Standish wrong?
The Standish Group’s Chaos Report describes two-thirds of IT projects as being “challenged.” Now, three academics have published a report suggesting these numbers are flawed, and that only one-third of IT projects actually fail. If this new report is accurate, it represents a significant departure from common perceptions of IT project risk and failure. The research was conducted by Chris Sauer, Andrew Gemino, and Blaize Horner Reich who described their results in an article titled, The impact of size and volatility on IT project performance.
EXECUTIVE CONCLUSIONS
The following table outlines management recommendations made by the authors on the basis of their research:
DIFFERENCES RELATIVE TO PREVIOUS RESEARCH
To understand why the results differ from Standish, I asked Blaize Horner Reich, one of the authors, to explain. Blaize sent me unpublished material describing differences between her group’s methodology and that used to create the Chaos Report, which remains the most widely-quoted measure of software development failures.
In contrast to Standish, Blaize and her colleagues used project managers, rather than executives, as respondents. Since project managers typically have more detailed and specific project knowledge than do executives, this should yield more accurate and detailed research results. In addition, the group only researched most recent projects, presumably reducing the effect of poor memory on their findings.
A second important difference between the new research and Standish derives from assumptions made by the authors regarding the best way to classify IT projects. Instead of following the Standish model, which characterizes projects as failed/challenged/successful, the authors used a more finely-grained classification system, which emerged as they analyzed the data.
Here is a list of the failure/success categories that arose out of the research:
MEASUREMENT VARIABLES AND DATA
The authors examined two primary measures as determinants of project risk: size and volatility.
Project Size
The authors measured size according on the basis of four dimensions:
- Effort (measured in person-months)
- Duration (measured in elapsed time)
- Team size
- Budget
In summarizing the impact of size-related factors on project performance, the authors write:
Overall, increases in the size of a project mean increased risk, even for experienced project managers. However, conventional wisdom that restricts project size using budget or duration is somewhat misguided. A focus first on effort, then on team size and duration will limit risk of underperformance.
Surprisingly, we found that one-quarter of projects underperform however small their size. Even projects with budget less than £50,000, effort less than 24 person-months, duration shorter than six months, or team size of less than five experienced 25% risk. There is a significant level of risk regardless of size.
This size data is reported in the tables below:
Volatility
Project volatility was measured along two dimensions:
- Governance volatility (measured by changes in project manager or
executive sponsor) - Target volatility (measured by changes in schedule, budget, and scope).
The authors summarize volatility as a determinant of failure:
Projects with no change in key personnel faced a 22% risk of underperforming, whereas projects with two or more changes faced a risk of more than 50%. Projects with nine or fewer target changes faced no more than a 33% risk of underperforming whereas projects with more than nine changes faced a risk over 50%. These results suggest volatility is strongly related to performance, and indicate the importance of project governance.
The data regarding volatility is show below:
AUTHORS’ SUMMARY CONCLUSIONS
The authors offer these managerial insights:
Our results indicate that while approximately 9% of IT projects are abandoned, another 7% consistently overdeliver on original project targets.
What our results suggest is that IT project managers cannot accept all of the responsibility of delivering projects successfully. Top management and steering committees have a significant role to play in managing project risk. Ambitious-sized projects, moving targets, and managerial turnover present challenges for IT projects that stretch even experienced project managers and result in greater variances. Effective oversight of projects can help project managers respond to these challenges.
MY CONCLUSIONS
This research is serious, credible, and cannot be ignored. In addition, it’s consistent with other recent studies of IT failure. I recommend following the authors’ work to see how it develops over time.
As the authors correctly assert, IT failure rates remain high, and responsibility for success clearly lies with both executive management and the project team. The risk reduction strategies outlined in the executive conclusions table (at the top of this post) are well-considered and should be followed by organizations implementing IT projects.
Although the research methodology and data may differ from previous studies, the management conclusions and action items are fundamentally in accord with best practices for avoiding failed IT projects.
December 4th, 2007
SAP Influencer Summit: SOA grows up
I’m spending a couple of days at the SAP Influencer Summit, an invitation-only event for approximately 500 key SAP partners, bloggers, analysts, user group leaders, academics, and the press. According to Mike Prosceno, Vice President for Marketplace Communications, the Influencer Summit is intended to facilitate “networking and relationship building, and is the last formal opportunity of the year for SAP to address its ecosystem of SAP watchers.”
Through a carefully-orchestrated set of presentations, SAP offered attendees a glimpse at important accomplishments and future plans. Here are some thoughts and impressions from the first day of this event:
Overall, I’m impressed. SAP’s product vision is forward-thinking and comprehensive. Years of SOA-based product development effort have finally started paying off with Business byDesign and the revamped ERP Suite, both based on the NetWeaver platform. Business byDesign, an ERP suite for small enterprises, was created from the ground up, using modern development tools, methods, and a globally distributed development environment. Call me a geek, but I buy into the platform’s underlying depth and elegance.
In the long run, products such as Business byDesign will make implementations shorter and more successful, reducing the size, scope and impact of potential project failures. Obviously, that’s a good thing.
Simplifying complexity is an important theme which arose during presentations, as well as in private blogger meetings with SAP executives, such as CEO Henning Kagerman and Executive Board member Peter Zencke.
Customizing is out; extending is in. Continuing a mantra stated during dialog at Sapphire in Vienna last spring, custom code is history at SAP. In response to my question, Peter Zencke described three types of customization:
- Setting configuration “switches,” which continues to be an accepted and approved method to make packaged SAP software work in varied customer environments.
- Directly modifying code, “which SAP will not support, so customers can maintain the ability to perform in-flight maintenance.”
- Extending the software, using a “composition layer” that gives access to SAP’s SOA services, has become the approved way for adapting SAP software to meet specific requirements, such as those posed by “micro-verticals”.
In plain English, SAP now provides a foundation, on top of which third-parties (customers and partners) can write new applications and which prevents the core SAP code from being changed. This approach ensures a clean, future upgrade path without the downstream costs traditionally associated with custom code. Customer adaptations integrate directly with the core SAP software to extend it’s functionality, but again, the core remains protected.
In subsequent conversation, Jim Hagemann Snabe, who is responsible for SAP’s Business Suite product line, reaffirmed the importance of avoiding custom code.
Some observers remain skeptical. Analyst and blogger Judith Hurwitz, who also attended the Summit, registered concerns during a late-afternoon conversation:
It all works, if you assume you live in SAP-only world. But the reality is many customers have complicated, multi-vendor environments that include many parts. Unless you make the SAP world your context it wont work. In fairness, you can say that about any enterprise software world. Each vendor wants you to view their offerings as the center of the world.
Judith discussed the same issue on her blog:
So, why does this bother me? I think that because that the strategy and platform assumes that customers will be willing to adopt a single vendor platform that everything in their enterprise will flow through. To its credit, SAP does expect that third party applications and environments can be integrated through well defined interfaces. These outside resources would be integrated through the repository. However, will a customer want to give a single vendor that much power? Perhaps? Will most customers overcome the internal political issues to have everyone agree on a single platform across departments, subsidiaries, and even partners? I would say that I am skeptical.
Fellow Enterprise Irregular, Prashanth Rai, offered another note of concern during a conversation. He’s impressed by the technology, but wants to see businesses adopt the new software before he fully buys-in. From Prashanth’s perspective, without more customers, the vision remains unproven:
SAP has delivered and continues to deliver on the technical aspects of “business network transformation,” but the realization of this, from a business/customer point of view, remains to be seen in 2008.
When a large company such as SAP offers a view across its many initiatives, it’s not possible to comment on everything at once. This post summarizes first impressions, based on a long day spent trying to absorb buckets of information very quickly. Others may disagree with these assessments and opinions, but that’s my broad comment for today.
Michael Krigsman is CEO of Asuret, Inc., a software and consulting company dedicated to reducing software implementation failures. Click here to discuss this post with him on Twitter.
See his full profile and disclosure of his industry affiliations.
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