The Software Crisis

Although IT is becoming more reliable, faster, and less expensive, the costs, complexities, and risks of IT projects continue to increase. In 1995, a consulting firm called The Standish Group conducted a survey of 365 IT managers. The widely cited report, appropriately called CHAOS, was startling.

For example, although the United States spent over $250 billion each year on IT application development projects, 31 percent of these projects were canceled before completion. Almost 53 percent were completed, but they were over-budget and over-schedule and did not meet the original specifications. The average cost overrun for a medium-size company surveyed was 182 percent of the original estimate, while the average schedule overrun was 202 percent. That is, the results of the survey, summarized in Table 1.1, suggest that a medium-sized project originally estimated to cost about $1 million and to take a year to develop, actually cost $1,820,000, tookjust over two years to complete, and only included 65 percent of the envisioned features and functions! Sadly, 48 percent of the IT managers surveyed believed there were more failures at the time than five and ten years earlier.

Why IT Projects Fail

The CHAOS report also provides some interesting insight as to why some projects succeed while others fail. According to the survey, user involvement, executive

Table 1.1 Summary of the CHAOS Study Results

Company Size

Average Cost of Development

Average

Cost Overruns

Average Schedule Overrun

Original Features and Functions Included

Successful Projects a

Challenged Projects b

Impaired Projects c

Large

$2,322,000

178%

230%

42%

9%

61.5%

29.5%

Medium

$1,331,000

182%

202%

65%

16.2%

46.7%

37.1%

Small

$ 434,000

214%

239%

74%

28%

50.4%

21.6%

a Completed on-time and on-budget b Completed, but over-budget, over schedule, and includes fewer features and functions than originally envisioned c Cancelled before completion a Completed on-time and on-budget b Completed, but over-budget, over schedule, and includes fewer features and functions than originally envisioned c Cancelled before completion

SOURCE: Adapted from The Standish Group, CHAOS (West Yarmouth, MA: 1995), http://www.standishgroup .com /visitor/chaos.htm.

management support, and a clear statement of requirements ranked at the top of the list of factors essential for IT project success. On the other hand, lack of user involvement and incomplete requirements appear to be the two main factors for projects being challenged or canceled before completion.

Tables 1.1 and 1.2 summarize some of the key findings of the CHAOS report. First, larger projects report a success rate of only 9 percent and appear to be much more risky than medium and smaller projects. Technology, business models, and cycle times are changing too quickly to develop systems that take much more than a year to complete. This data also supports the need to break up large projects into smaller, more manageable ones that can be completed in less than a year. Companies such as Sears, Roebuck and Co., for example, have new, stricter IT project deadlines that require all web-based projects be completed within three months (Hoffman and King 2000).

In addition, one can look at the project factors for successful and not-so-successful projects to see what may be happening on those projects. User involvement leads the list as the most important factor in project success. This should come as no surprise since the client's expertise is needed to identify problems and opportunities and to define requirements. Moreover, active participation by the client keeps them interested in and excited about the project. Individuals will also begin to take ownership of a project if they feel that they have a stake in the project's success or failure. Effective communication between the techies and non-techies allows for a clearer definition of the project's goals and requirements. Working together, developers and users have more realistic expectations because they themselves set those expectations together. Management is then more compelled to support a popular project.

On the other hand, lack of user input or involvement ranks at or near the top in factors affecting challenged and impaired projects. One can almost picture the chain of events. Without close support of the key users, the project team will have a difficult time understanding the goals of the project and defining the requirements. As a result, suspicion and hostility may arise, and there can easily be an "us versus them" situation. Without effective communication and a clear direction, changes to the project's requirements always seem to appear, and both groups may set unrealistic expectations. Chaos sets in. Management begins to find fewer reasons to support an

Table 1.2 Summary of Factor Rankings for Successful, Challenged, and Impaired Projects

Factors for Factors for Factors for

Rank Successful Projects Challenged Projects Impaired Projects

Table 1.2 Summary of Factor Rankings for Successful, Challenged, and Impaired Projects

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

Get My Free Ebook


Post a comment