Critical factors for IT success

In my last Industry Insight, I mentioned that 70% of IT investments fail totally and that 19 out 20 enterprise resource planning (ERP) implementations fail to deliver what was promised. I then outlined the seven factors that cause failure.

Understanding what causes failure is one thing, designing solutions to succeed is another.

In engineering terms, reliability is the opposite of failure. The question is, therefore, given a 70% probability of outright failure and a 95% probability of partial failure, how does one undertake an IT project that has a high reliability?

In most areas of life today we take a probability of failure of a small fraction of 1% as prerequisite and when we experience failure in even the most mundane consumer products, indignation is not far away.

So why does business tolerate the level of failure with IT? And how do we avoid failure?

Based on my experience with IT over three decades, I have examined the characteristics of successful IT investments and listed the following seven factors as being prerequisites for success:

The first requirement for success, amounting to 25% of what is required for success, is "executive custody". It is much more than "ownership" or "sponsorship". It is a proprietary and parental sense that the information systems belong to the business, are central to the viability and success of the business and therefore are central in what receives executive attention and input.

The problem is seldom the technology; it is the way that business and IT practitioners conceptualise the business solution, plan it, execute it and operate it.

James Robertson, Independent management consultant.

The "strategic solution architecture" factor accounts for 18% of what is required for success. It is NOT some esoteric wish list; it is a robust, plain language statement of how the business will look when the solution is completed and integrated into the business.

The solution architecture can be as simple as "we will process and despatch orders in not more than six hours", followed by a detailed statement of each and every aspect of the business that must be addressed in order to satisfy the stated business outcome. This includes legal matters, trade union matters, credit-granting policy, staff morale and motivation, warehouse layout and operation, etc. It will include requirements for the information system ONLY if changes are required. In other words, IT is treated as an integral component of a business solution, NOT something that drives the business down a road to an unspecified mysterious business outcome.

The third requirement for success, weighted 16%, is "strategic alignment". While the strategic solution architecture is the description of what the business solution will look like on completion, strategic alignment is a description of the journey. Strategic alignment is determination of the routes that the business, people and technology (including but NOT limited to IT) will take to reach the desired outcome.

In terms of the previous example, strategic alignment would include a comprehensive review of credit-granting policies and procedures in order to ensure orders can be despatched within six hours. This could involve some innovative use of IT but the IT requirement is driven by the desired business outcome, and the people and technology must be aligned towards the same outcome at the same point in time.

Notice that these first three points together are weighted as being 59% of what is required for a successful outcome. None of these factors contain any technology as such and all three are relatively abstract in terms of conventional wisdom with regard to the application of IT in business. This abstractness is a major reason why so many projects and investments fail.

The fourth factor, weighted 14%, is "business integration and optimisation". Business integration relates to interweaving the IT solution with the people who constitute the business. IT is of no value until people are using it to create or do something that other people consider sufficiently valuable to pay more money for than the entire solution costs.

Business integration and optimisation involves all aspects of aligning the technology and the people in a practical way that delivers the expected results. This includes all aspects of communication, training, management of change and everything else from a "people perspective" required to move the business and the solution to a point where they are inter-operating effectively and efficiently.

Note that business process reengineering (BPR) is NOT what is being referred to here; BPR is a contradiction in terms with regard to the use of the word "engineering".

The fifth factor, weighted 12%, is formal "project management" as it is widely practised and understood. There is a huge body of expertise in the field of project management which is well established and well applied in human endeavour.

The only problem with project management in IT is that frequently it is not applied with the same rigour as applied in the construction of a large building, aircraft or other notable project of comparable complexity in other fields of human endeavour.

The sixth factor, weighted 10%, is what I term "data engineering". By data engineering I mean "the definition of information content in a way that is structurally (taxonomically) fundamentally meaningful to people who understand the business and the translation of this content into structured codes which faithfully and accurately reflect human understanding in a way the computer can manipulate with minimal human intervention so that the computer system appears to be intelligent".

Computers only understand 0s and 1s; humans only understand plain language. The subject of data engineering, structuring the information content as opposed to structuring the technology, is complex, little understood and little talked about. Yet many of the claims made for IT and particularly "business intelligence" fall flat in the absence of effective data engineering.

This factor begins with the general ledger chart of accounts and extends into every facet of the use of IT in business. It is frequently behind the frustration of business executives with the inability of IT to deliver the required information.

In the most basic terms, if the chart of accounts is not designed from a fundamental strategic view of the business, users will never obtain truly strategic financial information from information systems.

The seventh factor, for which only 5% remains, is "technology". IT failure seldom results from technology failure. Technologists know how to produce technology. The problem is seldom the technology; it is the way that business and IT practitioners conceptualise the business solution, plan it, execute it and operate it.

For a successful business outcome, all seven of the above factors must be in place and effectively managed and applied. Once this is done, a successful outcome becomes inevitable.

In my next Industry Insight, I will discuss the seven attributes of what I term "an engineering approach" as another major dimension for a successful IT investment. In the interim, readers can write to me care of ITWeb to tell me of experiences of IT investment success measured in business terms.