Five risks that threaten the success of IT transformation projects

An IT transformation project is carried out to enhance the technical and business environment to an agreed level, and this type of IT-enabled organisation change comes in many forms. While some projects involve low risk, incremental changes to existing processes, others are high risk and innovation heavy, and require large-scale implementations of company-wide systems, carried out in partnership with a vendor.

Risky business

Now more than ever, transformation projects are living up to their name, increasingly involving real transformation using emerging, innovative technology to support new business models. IT transformation projects have always been risky; sooner or later, most of them run into trouble. And these risks only multiply when new, untried technologies are added to the mix.

We spoke to Solutions Architect at Logicalis Australia, Greg Daley, about the problem of risk in large scale IT transformation projects and how best these can be managed. He identified five risks that are common to significant technology transformations, and are applicable across software, infrastructure, and applications.

  1. Lack of common vision and cooperation between customer and vendor

Key to ensuring project success is that the vendor cares about and delivers the desired outcome for the customer. This means investing the time to understand the customer’s vision and the key impacts a transformation project will have on the organisation. In order to deliver the project, cooperation is necessary at all project stages, with stakeholders keeping this vision in mind.

  1. Project scoping and budget mismatch

Typical sales and tender process require vendors to interpret requirements closely and exclude components and functions which are extraneous. In many cases, however, tenders are unclear about the requirements and cost implications, which can lead to incorrect project scoping or incorrect estimations as to the costs required for implementation. Full validation and clarification of the costed items is necessary, as well as frank discussion around the relative cost impacts, so that these costs can be supported through to executive stakeholders.

  1. Design and requirements mismatch

To ensure project success, a project design should be made to embody the customer’s goals and requirements, and tests carried out to demonstrate that these are able to be met. Should changes in customer requirements emerge (due to incomplete processes or changes in customer priorities), the scope and feasibility of a solution will be impacted.

  1. Lack of effective project management controls

The project managers on both the customer and vendor side need to understand and control the project based on the agreed plan, and deviate only if this is in the interest of both organisations. Where project management is either unenforced or overly rigid, consequential risks to the timeline and cooperation complications are likely to arise.

  1. Technical feasibility and operational challenges

Technical challenges will arise regarding the implementation or migration of functions within the customer network, such as bugs, which can be triggered due to the unique customer environment. Project teams from both the customer and vendor side need to be able to identify practical solutions which will enable project progress even in the case that further works for troubleshooting and bug fixing are required.

Don’t be a statistic

Most failed projects reveal clear, early warning signs that the indicate risks but these are often missed, ignored or not managed. As a result, many organisations pursue IT transformation projects that do not succeed in achieving key objectives. It’s crucial that the five common risks outlined above are acknowledged from the beginning and managed throughout the duration of the project and within the wider context of organisational and behavioural change. This way, risk is managed more effectively because the project is properly defined within the business environment, threats are clearly identified, and mitigation plans developed.

If you’re an IT leader, we’d appreciate your input to our 2016 Global CIO Survey. Click here to participate, and you’ll receive a small gift and a copy of the report at the completion of the study.

Tags CIO, digital technologies, Digital Transformation, CIO Leadership, IT infrastructure, IT leaders, IT leadership, IT project, Global CIO Survey, IT transformation, Project Management


Align your business strategies with the business goals