IT Disasters & other Stuff Ups!

by Marco Tapia

in management-it-consulting,

March 1, 2017

There is no-doubt that society as we know it, is highly dependent on technology and used for almost all facets of our personal and business life. We use it to make everyday purchases, socially communicate with each other, promote productivity of our workplaces, store critical information and rely on it for our businesses to succeed.
A main factor in our use of technology is that we place a lot of trust in it and when it fails, it can be anything from an annoying nuisance to a spectacular IT project failure.
Recently, you may recall such a failure with the ABS's $470 million census collection for 2016, which turned into an embarrassing public relations disaster. The events unfolded over days to weeks and then months as an angry Prime Minister demanded answers. This was a major IT issue, in which IBM was involved, when the system crashed all because it couldn't cope with multiple on-line form submissions (1).
Australia's largest "worst failure in the history of public administration" was back in 2007. This time a $6 million contract was awarded to IBM from the Queensland Government to implement a very large change to the payroll system. This spectacular failure became a $1.2 billion blow-out in costs. (1)
In December late last year, another blow to the government was within the Australian Taxation Office (ATO). This time an outage, caused disruption over two days, was related to the 2015 hardware storage upgrade by Hewlett Packard Enterprise. According to the head of the Government agency, " the glitch is believed to be the first of its kind in the world". Even though the ATO systems were up and running 48 hours later, there were numerous portals unavailable to the public (3). You can read more about the ATO issue here.


Are IT Projects pre-determined to fail?
There are numerous IT project failures that are making headlines and costing companies or tax payers millions to resolve. It seems major projects and the menaces that lurk underneath need to be mastered to minimise the impact.
Back in 2002 Sydney Water's customer billing system created issues which initially started at $38 million eventually blew out to a cost of $1351.1 million. Then the University of Melbourne had a major software collapse costing $47 million the same year. (1)
Paul Shelter was the former head of the Digital Transformation Office (A government department overseeing IT solutions) before resigning in November last year, states that the public service has an "unwillingness to change the way technology is deployed in order to match the modern world". (2) Shelter goes on to suggest that government IT failures are mostly predictable due to relationships with larger companies during the tender process, lack of communication down to the junior levels of staff and putting their own interests ahead of its users. Read more about Paul Shelter's opinions here.
Technology contracts expert Paul Kallenbach states, IT projects tend to suffer a "sum cost theory". Government or companies push on with knowingly flawed projects - for fear of wasting money- rather than scrap them and start again. He goes onto mention that 65 to 85% of IT projects fail to meet objectives or run over-time or over-budget sometimes costing between 50 to 100%. An example was the National Health Service in Britain where the replacement of a core IT system which doubled in cost and then was abandoned.(1) Click here to read further about this issue.
With IT projects, every failure is different and the underlying causes are often the same. The lessons to learn are many but proper preparation will always be key, so here are some thoughts for any pre-mortem you wish to undertake and what 'not to do' (1).
Paul Kallenbach's oops guide to creating an IT stuff-up
1) You asked them to do what? - Start by ensuring the supplier only has the most basic, superficial understanding of your needs. At all costs, avoid answering direct questions during the tender process, and do not allow them to audit you, as this may actually provide them with some understanding of the complexity of your business.
2) You didn't agree to what? - Try to leave key issues, such as service levels or disaster recovery, to a very late stage in the negotiations, particularly if the project is critical to your business. That way, you'll probably be forced into signing a deal with key principles unclear or unsettled. If you're really fortunate, the supplier's performance in those areas will deteriorate immediately after you sign the contract.
3) You mean they're supposed to make a profit? - Make sure you pressure the supplier into under-pricing the contract so that it can only ever operate at a loss. Also, make sure you lock them in at this price for five, maybe even 10, years with no benchmarking or price review mechanism. Then watch them flounder in that sea of red ink. That'll keep them focused.
4) Who needs clarity? - Try to describe the services to be provided in as little detail as possible. Perhaps jot them down on the back of a napkin and staple it to the contract, or maybe just leave the contract schedules blank.
5) Process? What process? - Spend lots of time developing useful and practical processes for managing scope changes, communication, project reporting, asset tracking, resource planning, early problem identification and dispute resolution. Then completely and utterly ignore them.
6) Spoiling for a fight - From the very start, show them who's boss. If you've managed to negotiate a superior commercial position, exploit it. Be belligerent and obstructive. Don't compromise or be fair. If you're successful enough, very soon the environment will become so adversarial and unpleasant, key project staff will make a dash for the exit.
7) Nothing less than perfection - Insist the supplier's pricing assumes absolutely perfect performance, leaving no margin whatsoever for any adverse events. After all, what could possibly go wrong?
8) You think you own what? - Consider ignoring intellectual property issues. That way, important data or materials you once owned, or custom developments that you've paid for, will probably end up in the hands of suppliers. This will increase the chance that you'll be locked into that supplier, or have to make hefty payments for the return of materials you always thought were yours.
9) She'll be right, mate - Concerned about the supplier's financial viability? Don't worry about asking for performance guarantees. After all, they're sure to struggle through.
10) What do you mean you're leaving? - It's just far too much of an effort to think through when you may need to exit the relationship, or what you'll need to do at that time. So don't worry about it. After all, what are the chances of the supplier being bought, going broke or failing to perform? Or the whole relationship just going plain bad. And never address the process for transitioning personnel, data and know-how to a new supplier. That way, all the valuable things you've learned from the project will be lost and you'll be free to make the same mistakes over again.
IT project disasters are costly, but some thought can go into the project managing side. Here is something that is fun and all project managers are going to enjoy. Click to watch video.
Marco Tapia
PicNet Pty Ltd