Why do large IT projects fail? The answer can range from lack of planning and executive buy-in to mismanaged expectations and insufficient testing. 

This is only the tip of the iceberg. There are many other reasons why even the most promising projects can go awry.

Understanding where things go wrong in large-scale IT projects is key to making sure your project stays on track. Today, we’re sharing a few of the top reasons these efforts fail and what you can do to avoid the same mistakes. 

A Failed Payroll System Implementation

Panorama’s Expert Witness team was retained to provide a forensic analysis and written report to the court regarding the failed implementation of a major software developer’s ERP/payroll system.

Why do Large IT Projects Fail? [9 Reasons]​

1. They Stop Short of Full Implementation

To most IT teams, a project is complete once the software is live, and everything is up and running.

However, true implementation means you’ve achieved full and long-term system adoption.

It isn’t enough to simply have the technical pieces in place. You need to make sure your employees are actively using the software and doing so in ways that help you meet your business goals. 

Otherwise, you could end up with a costly ERP system that essentially sits on the shelf. Meanwhile, employees revert to familiar workflows because they weren’t trained enough on how to use the new tools and processes.

To avoid this fate, make sure employees are fully trained on the new system and understand how it will personally benefit them. 

2. There’s a Lack of Organizational Alignment

It’s easy to nod your head and agree that business strategies and IT strategies should intersect. After all, ERP software, SCM software, and other enterprise solutions not only solve technical pain points but help organizations improve productivity and keep customers happy. 

While this understanding might exist at the top level, it easily gets misconstrued as you move down the departmental ranks. These people matter, too. A large-scale IT project requires the support and involvement of many different team members. 

It’s easy for communication to break down as these entities try to work together. Before long, you might find that no one truly understands what the project is ultimately trying to achieve.

Some teams may prioritize the project while others let it slide. This affects the overall budget and timeline, not to mention group morale. When this happens, failure is often around the corner.

Before an ERP implementation, digital transformation, or any other type of IT project, make sure everyone assigned to the project understands the role they’re playing, and why it’s important. They should also understand who they report to, the specific activities they need to complete, and how their tasks tie into your great business initiatives. 

3. They’re Tech-Oriented, Not People-Oriented

One of the most common reasons large IT projects fail? It might not be what you think.

Most of the time, the problems aren’t solely technical in nature. Instead, they occur because project leaders failed to recognize the importance of organizational change management (OCM).

OCM helps you view your project from the point of view of various stakeholders. What does the change mean to them, and how can you help them understand and embrace it?

It’s no secret that change can be scary, and this extends to the business realm. Despite the bells and whistles that your new solution might offer, you’re bound to encounter some type of resistance. Pushing ahead and expecting employees to catch up is a recipe for disaster.

A change management plan can help you prioritize communication, feedback, and training at every touchpoint, so you can give your workforce the information they need to make the best use of the new system.

4. The Final Design Isn’t User-Friendly

It’s easy to focus on collaboration in the beginning. During this time, project leaders and end-users are sharing ideas and discussing the features and functionality they want in the new system.

However, after this initial phase, many IT teams take the reins, and the final product ends up looking nothing like the initial design. 

When IT teams work independently and fail to engage users throughout the project, the result is usually less than user-friendly.

We recommend engaging users throughout the design and development process, so you can make sure you’re always creating something that’s in step with what your employees need and will use. 

5. There are No Metrics to Measure Success

Once your new system is implemented, how will you measure its success? Do you have metrics and key performance indicators (KPIs) in place to ensure your solution brings about real change?

Without a clear plan in place, you could end up simply replacing your legacy systems without delivering actual business benefits. 

Your C-suite and department leads should clearly define what project success means for your company. Once you have those goals in place, stick with them. When you constantly change the vision for your project, it becomes difficult to gauge whether you’re staying on track. 

6. The Executive Team is Disengaged

You need your C-suite to be fully behind your project. It’s as simple as that. Without their support and investment, any large-scale project is doomed to fail. 

While they may have given you the green light to proceed with the project, their work is far from done. In addition to agreeing to the effort, your executive team members should also be closely involved in the decision-making process. This includes being present for conversations about the resources, time, and money you’ll assign to the project. 

We recommend forming an executive steering committee, so your team can clarify their digital strategy and ensure the project doesn’t become just another technology project but an integral part of your vision for the future. 

7. You Fail to Perform Business Process Management

When you undergo a large-scale IT project, there will undoubtedly be changes required to your existing processes. 

One way to manage your processes is through business process reengineering. This is the practice of identifying pain points in your current workflows and redesigning them as necessary to maximize the features of the new system. 

If you don’t undertake any form of business process management, you won’t know where you’re starting from or where you’re headed. As a result, you could select the wrong system, partner with the wrong vendor, or invest in features that won’t get you any closer to your business goals. 

8. Scope Creep Overtakes the Project

There will inevitably be changes to your initial project plan, especially as you define requirements more clearly and consider user feedback. 

However, sometimes this gets out of hand. IT projects can easily go off-track if requested changes are copious, unnecessary, and distracting. This is often known as scope creep. It happens when you slowly expand a project over time until the final product is much more expensive and labor-intensive than planned. 

One of the primary causes of scope creep is customization requests. Many organizations spend an inordinate amount of time performing minor tweaks and enhancements to their system, never reaching that state of “perfection” they think is right around the corner. 

9. Risks aren’t Managed and Mitigated

There are many known risks (and some hidden ones) that can make large technology projects fail. These can be operational, organizational, financial, or technical in nature, and often come about because of internal problems or vendor miscommunication. 

While most IT leaders know about these risks and their implications, they underinvest in the methodologies required to mitigate them. 

Instead of assuming that your project will be immune to such vulnerabilities, we recommend investing in success factors like organizational change management. When you follow a proven methodology, it’s much easier to bounce back when issues inevitably occur. 

Avoid IT and Organizational Issues

There’s no single answer to the question, “Why do large IT projects fail?” Rather, there are many risky scenarios that could result in IT or ERP failure.

Our team of enterprise software consultants can help you start your project off right and keep it on track throughout the implementation process. Contact us below for a free consultation.

About the author

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As Director of Panorama’s Expert Witness Practice, Bill oversees all expert witness engagements. In addition, he concurrently provides oversight on a number of ERP selection and implementation projects for manufacturing, distribution, healthcare, and public sector clients.

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