Read the attached article.

Based on it, name three reasons for IT project failure and discuss why these can possibly lead to project failure?

QDTENTAT. RF:POR HARKBT CRASH A AfEr itz new aut onatod atapp2y=cha1n mara genent Byetea failed last Detober, leaving rlexchand 1z0 ztuok 1 ta eonpany warehouzes, British food retaldor Salpebary' z had to hire 3000 additional elerks to etock 1 ta shelves. This story has been floating around the information well as investments that can't be made-are now well technology industry for 20 -some years. It's probably into the billions of dollars a year. apocryphal, but for those of us in the business, it's The problem only gets worse as IT grows ubiquitous. entirely plausible. Why? Because episodes like this hap- This year, organizations and governments will spend an pen all the time. Last October, for instance, the glant estimated \$is trillion on IT hardware, software, and servBritish food retailer J Sainsbury PLC had to write off its ices worldwide. Of the IT projects that are initiated, from US \$\$26 million investment in an automated supply-chain $ to is percent will be abandoned before or shortly after management system. It seems that merchandise was stuck delivery as hopelessly inadequate. Many others will arrive in the company's depots and warehouses and was not get- late and ower budget or require massive reworking. Few ting through to many of its stores. Sainsbury was forced IT projects, in other words, truly succeed. to hire about 3000 additional clerks to stock its shelves The biggest tragedy is that software fallure is for the manually [see photo, "Market Crash"]. most part predictable and avoidable. Unfortunately, most This is only one of the latest in a long, dismal history organizations don't see preventing failure as an urgent of IT projects gone awry [see table, "Software Hall of matter, even though that view risks harming the organiShame* for other notable flascoes]. Most IT experts agree zation and maybe even destroying it. Understanding why that such failures occur far more often than they should. this attitude persists is not just an academic exercise; it What's more, the failures are universally unprejudiced: has tremendous implications for business and society. they happen in every country; to large companies and small; in commercial, nonprofit, and governmental SOPTWARB IS EVERYWHERE. It's what lets us organizations; and without regard to status or reputa- get cash from an ATM, make a phone call, and drive our tion. The business and societal costs of these fallures - cars. A typical cellphone now contains 2 million lines in terms of wasted taxpayer and shareholder dollars as of software code; by zoso it will likely have 10 times as Software Hall of Shame LOSE: the total abandonment of a project before or shortly after it is delivered, and if you accept a conservative failare rate of 5 percent, then billions of dollars are wasted each year on bad software. For example, in ao04, the U.S. government spent soo billion on software fnot counting, the embeckled software in weapons systemsk; a 5 percent failure rate means is billion was probably wasted. However, after several decades as an IT consultant, I am corvinced that the failure rate is 15 to 20 percent for projects that have budgets of tso million or more. Looking at the total imvestment in new software projects - both gowetnment and corporate-oner the Last five years, I estimate that project faihures have likely cost the U.S. economy at least \$25 billion and maybe as much as $75 billion. Of course, that wis billion doesn't reflect projects that exceed their budgets-which most projects do. Nor does it reflect projects delivered late-which the majority are. It also fails to atcount for the opportunity costs of having to start over once a project is abandaned or the costs of bug-ridden systems that have to be repeatedly reworked. Then, too, there"s the cost of litigation from irate customers suing suppliers for poorly insplemented systems. When you add up all these extra costs, the yearly tab for failed and troubled software conservatively runs somewhere from 6o billson to o billion in the United States alone. For that money, you could lanch the space shuttle 100 times, build and deploy the entire 24-8atellite Global Positioning System, and develop the Boeing 777 from scratch-and still have a few billson left aver. WHY DO SOPEAARB PROJBCRS FAIL SO OPTEN? Among the most common factors: - Unrealistic or unarticulated project goals - Inaccurate ertimates of needed resources - Badly defined system requirements - Poor reparting of the project's status - Lamanaged risks - Poor conmmunication among customers, developers, and users - Dse of immature technology - Insbility to handle the project's complexity - Sloppy development practices - Poor project management - Stakeholder politixs - Commercial pressures Of eourse, IT projects rarely fail for just one or two reasons. The SOPTHARZ PROJEC? PAILURES bave a lot in common FBI's VCF project suffered from many of the problems listed abore. with airplane crashes. Just as palots never intend to crash, softMost failures, in fact, can be traced to a combination of techuical, ware developers don't aim to fail. When a commercial plane project mansgement, and business decisions. Each climension inter- crasbe8, investigators look at many factors, such as the weather, acts with the others in complicated ways that exacerbate project maintenance records, the pilot's disposition and training and risks and problems and increase the likelihood of failure. cultural factors within the airline, Similarly, we need to look at Consider a simple software chare: a purchasing system that auto- the business environment, technical management, project manmates the ordering, balling, and shipping of parts, so that a sales- agement, and organizational culture to get to the roots of softperson ean input a customer's order, have it artomatically checked ware failures. against pricing and contract requirements, and arrange to have the Chief amoag the basiness factors are competition and the need parts and invoice sent to the customer from the warehouse. to cut costs. Increasingly, senior managers expect IT departments The requirements for the system specify four basic steps. to do moee with less and do it faster than before; they view sottware first, there's the sales process, which creates a bill of sale. That peojects not as imvestments but as pure costs that must be controlled. bill is then sent through a legal protess, which reviews the con- Political exigencies can also wreak havoc on an IT project's thactual terms and conditions of the potential sale and approres schedule, cost, and quality. When Denver International Airport them. Third in line is the prowision process, which sends out the attermpted to roll out its automated bagerge-handling system, state parts contracted for, followed by the finance process, which sends and local political leaders held the project to one unrealistic schedLut an invoice. Let's say that as the first process, for sales, is being written, the jagss opening of the airport fthen the largest in the United the programmers treat every order as if it were placed in the com- States), which compounded the financial impact manyfold. pany's main location, even though the company has branches in Even after the system was completed, it never worked reliably: several states and countries. That mistake, in turn, affects hore it chewed up baggage, and the carts used to shattle luggage around tax is calculated, what kind of contract is issteed, and so on. frecguently derailed. Eventually, Whited Airlines, the airport's main The sooner the omission is detected and corrected, the bet- tenant, sued the system contractor, and the episode became a tester. It's kind of like knitting a sweater. If you spot a missed stitch tament to the dangers of political expediency: right after you make it, you can simply unravel a bit of yarn and A lack of upper-management support can also damn an IT move on. Bat if you don't catch the mistake until the end, you undertaking. This runs the gamut from falling to allocate enough may need to unravel the whole sweater just to redo that coe stitch. money and mamprirer to not clearly establishing the IT project's If the software coders don't eatch their omission tuntil final relationship to the erganization'8 business. In 2000, retailer Kmart system testing-or worse, until after the system has been rolled Corp, in Troy, Mich., launched a 1.4 billion IT modernization out-the costs incurred to correct the error will likely be many effort aimed at linking its sales, marketing, supply, and logistimes greater than if they'd caught the mistake while they were tics systems, to better compete with rival Wal-Mart Corp., in still working on the initial sales process. Bentonville, Ark. Wal-Mart proved too formidable, though, and And unlike a missed stitch in a sweater, this problem is much 18 months later, cash-strapped Kmart cut back on modernizaharder to pinpoint, the programmers will see only that errors tion, writing off the sajo million int had already invested in IT?. are appearing, and these might have several causes. Even after the Four months later, it declared bankruptcy; the company continoriginal error is carrected, they 1n need to change other calcula- ues to struggle today. tions and documentation and then retest every step. Frequently, IT project managers eager to get funded resort to In fact, studies have shown that software specialists spend a form of liar's poket, everpromising what their project will do, about 40 to so percent of their time on avoidable rework rather bow much t will cost, and when it will be completed. Many, if than on what they call walue-added work, which is basically work not most, software projects start off with budgets that are too that's done right the first time. Once a piece of software makes small. When that happens, the developers have to make up for it into the field, the cost of fixing an error can be soo times as the shortfall somehow, typically by trying to increase produchigh as it would have been during the development stage. tivity, rechacing the scope of the effort, or taking risky shortcuts If errors abound, then rework can start to swamp a project, like in the review and testing phases. These all increase the likelihood a dinghy in a storm. What's worse, attempts to fix an error often of error and, ultimately, failure. intraduce new ones. It's like you're bailing out that dinghy, but A state-of-the-art travel reservation system spearheaded by you're also creating, leaks, If too many errors are produced, the a consortium of Budget Rent-A-Car, Hilton Hotels, Marriott, and cast and time veeded to complete the system become so great that AMR, the parent of American Airlines, is a case in point. In 199a, going on doesn't make sense. In the simplest terms, an IT project usually fails when the abandoned it, citing two main reasons: an overly optimistic develrework exceeds the value-addled work that's been budgeted for. opment schedule and an underestimation of the technical diffiThis is what happened to Sydney Water Corp, the largest water culties imvolved. This was the same group that had earlier bailt provider in Australia, when it attempted to introduce an awtomated the hugely successful Sabre reservation system, proving that past customer information and billing system in 2002 [see boo, "Case performance is no guarantee of future results. Study H2]. According to an imvestigation by the Aastralian Auditor General, among the factors that doomed the project were inade- APTDR ORASH IEVESTICATORS OOUSIDER the quate planning and specifications, which in turn led to numer- weather as a factor in a plane crash, they loak at the airplane itself. ous thange requests and significant added costs and delays. Was there something in the plane's design that caused the crash? Sydney Water aborted the project midway, after spending Was in carrying too much weight? AU s6a million (US $33.2 millionh. In IT project fallures, simvilar questions invariably come up All of which leads us to the obvious cjuestion: why do so many reparding, the project's technical componentsi the barchuare and errors occur? software used to develop the system and the development prac- 46 IEEE Spectrum September 2005Na WWw.spectrum.jece.org tices themselves. Organizations are often seduced by the siren ously, companies with the worst IT practices won't subject themsong of the technological imperative - the uncontrollable unge selves to a CMM evaluation. (The CMM is being superseded by the to use the latest technology in hopes of gaining a competitive CMM-Integration, which aims for a bacader assessment of an orgaedpe. With technology changing fast and promising fantastic new nization's ability to cteate software-intensive systems.) capabilities, it is easy to succumb. But using immature or untested Immature IT practices doomed the U.S. Internal Revenue technology is a sure route to failure. In 1997, after spending $40 million, the state of Washington continued to plague the IRS's current 58 billion modernization. It shut down an IT project that would have processed driver's may just be intrinsically impossible to translate the tax code Lxenses and vehicle registrationg. Motor vehicle officials admit- into software code - tax law is complex and based on often-vasae ted that they got canght up in chasing technology instead of con- legislation, and it changes all the time, From an IT developer's The IT debacle that brought down FoxMeyer Drug a year earlier belped by open hostility between in-bouse and outside proalso stemmed from adopting a state-of-the-art resource-planning grammers, a laughable underestimation of the work involved, and A project's sheet size is a fountainhead of fsilure. Studies indismall ones. The larger the project, the more complexity there is are always of great interest to imvestigators. That's because the pilot in both its static elements (the discrete pieces of software, hard- is the ultimate decision-maker, responsible for the safe operation of ware, and 80 ond and its dynamic ele- ments ithe couplings and interactions among hardware, software, and users; connections to other systems; and so onl. Greater complexity increases the would take 3upo years. AnIT systems are intrinsically frag- ile. In a large brick building you'd bave to remove bundreds of the craft. Similarly, project managers play a crucial role in software strategically placed bricks to make a wall collapse. But in a projects and ean be a major source of errors that lead to failure, voo coo-line software program, it takes only one or two bad lines Back in woss, the London Stock Exchange decided to autoto produce major problems. In apow, a portion of AT\&T"s telephone mate its system for settling stock transactions. Seven years later, network went out, leaving an million substribers without service, after spending s660 million, it scrapped the Taurus system's develall beckase of a single mistyped character in one line of code. coment, not only because the design was excessively complex and they can cause errors at any stage of an IT project. To belp organs- was, to use the word of one of jts own senior managers, "deluzations assess their software-developenent practices, the U.S. sional." As investigations revealed, no one seemed to want to Software Engineering Institute, in Pittsburph crested the Capability know the true status of the project, even as more and more probMaturity Modkl, ar CMM. It rates a company's practices apainst five lems appeared, deadlines were missed, and costs soared [see levels of increasing maturity, Level 1 means the onganization is using box, "Case Study at 5 ]. ad hoc and possibly chaotic development practices. Lewel 3 means The most important function of the IT project manager is to the company has characterized its practices and now understands allocate resources to various activities. Heyond that, the project them. Level 5 means the orpanization quantitatively understands manaper is responsible for project planning and estimation, conthe variations in the processes and practices it applies. _ trol, arganization, contract manngement, quality management, risk As of January, nearly 2000 zovernment and commercial orjan- management, communications, and buman resource manngement. izations had voluntarily reported CMM levels. Over half acknowl- Bad decisions by project managers are probably the single greatedged being at either level 1 or 2,30 percent were at level 3 , and only est cause of software failures today. Poor technical management, by 17 percent bad reached level 4 or 5. The percentages are even more contrast, can lead to technical errors, but those can senerally be dismal when you realize that this is a seif-selected groap; obwi- isolated and fixed. However, abad project mansagement decision- ww.spectrum.iecoorg September 2005 IEEE Spectrum NA 47 such as hiring too few programmers or picking the wrong type way, The same attitudes existed among those responsible for the of contract-can wreak hawoc. For example, the developers of travel reservation system, the London Stock Exchange's Taurus the doomed travel reservation system claim that they were hob- system, and the FAN's air-traffic-control project-all indicative of bled in part by the use of a fixed-price contract. Such a contract organizational cultures driven by fear and arrogance. assumes that the work will be routine; the reservation syrtem A recent report by the National Audit Office in the UK found Project management decisions are often tricky precisely because not to go forward yet continaing anyway. The UK even has a govthey imolve tradeoffs based on fuzzy or incomplete knowledge. ernment department charged with preventing IT failures, but as Estimating bow much an IT project will cost and bow long it will the report noted, more than half of the agebxies the department take is as much art as science. The larger or more novel the proj- oversees routinely ignore its atvice. I call this type of behavior ect, the less accurate the estimates. It's a running joke in the indus- irrational project escalation-the inability to stop a project even try that IT project estimates are at best within 25 percent of their after it's obvious that the likelihood of success is rapidly approachtrue value 75 percent of the time. ing zero. Sadly, such beharior is in no way unique. There are other ways that poor project marsagement can basten a software project's demise. A study by the Project Management IN THE TIEAC AWATYSIS, big saftware failures tend to Instatuate, in Newton Square, Pa, showed that risk management is resemble the worst conceivable airplane crash, where the pilot was the least practiced of all project manazement disciplines across all inexperienced but exteedingly rash, flew into an ice storm in an indurtry sectors, and nowhere is it more infrequently applied than tuntested aircraft, and worked for an airline that gave lip servixe to in the IT industry Without effective risk manapement, software than in ensuring that its billing system could meet its eurress developers have little insight into what may go wrong, why it may needs [see box, "Case Stady He" . Even as problems arose, such as go wrong, and what can be done to eliminate or mtigate the risks. ainvoices' being sent out months late, managers paid listle attenNor is there a way to determine what risks are acceptable, in turn tion. When the billing gystem effectively collapsed, the eommaking project decisions reparding tradeoffs almost impossible. parny lost tens of millions of dollars, and its stock dropped from Poor project management takes many other forms, including $68 to $26 per share in one day, wiping out k3.4 billion in corpobad communication, which creates an inhospitable atmosphere rate value. Shareholders brought lawsuits, and several government that increases turnover; not investing in staff training; and not agencies nvestigated the company, which was eventually fined reviewing the project's progress at regular intervals. Any of these by million for regulatory violations. can help detail a software project. Even omanizations that get barned by bad software experiTHE IAST ARBA THAT IUVESTIGAPORS Look into a zooo repart, the US. Defense Science Hoard, an aduisory body after a plane crash is the oqpanizational environment. Does the to the Department of Defense, noted that *arious studies comairline have a strong safety culture, or does it emphasize meet- missioned by the DOD bad made inat recommendations for ing the flight schedule above all? In IT projects, an organization improving, its software development, bat only 21 of those recthat values apemess, honesty, communscation, and collaboration ommendations bad been acted on. The other an were still yolid. is more apt to find and resolve mstakes early enough that rework the board noted, but were being ignored. even as the DOD comdoesn't become overwbelming. If there's a theme that runs through the tortured history of bad Some orgamizations do care about software quality as the expesoftware, it's a failure to confront reality. On numerous occasions, rience of the software development firm Praxis High Integrity. the U.S. Department of Justice's inspector general, an outside panel Systems, in Bath, England, proves. Praxis demands that its customers of experts, and ofbers told the head of the FBI that the VCF system be committed to the project, not only financially, but as active parwas impossible as defined, and yet the project continued any- ticipants in the IT system's creation. The company also spends a ble, and what risks are involved, given the available resources. After that, Praxis applies a rigarous developenent approach that WHO KILLED THE VIRTUAL CASE FILE? limits the mumber of errors. One of the great advantages of this For background on the FBI, read Alonald Kessier's The Bureau: model is that it falters out the many woald-be chients unwilling The Secret History of the FBIl (St. Martin's Press, 2002). and spending the time and money to implement them properly, [See "The Exterminators," in this issue.] 21st century at hatp-l/www.fbi.gow/hq/ocio/osio homehtm. SOWBIEVELOFSOPTWAREFAILUREwillalwaysbewithus.Indeed,weneedtruefailures-a8oppesedtoavoid-demandgeneralmanagerofScienceInternationalAppliemions be with us. Indeed, we need true failures-as opposed to avoicl- Virtual Case File (VCF) -at hiffol/wwwesaicesm