Launch management: Why large scale IT projects often fail

• 20% of all IT projects are aborted; every other one is longer or more expensive than planned
• Image damage is frequently underestimated
• A lack of risk management is one of the main reasons for failure
• Probability of failure increases with project duration and complexity

Large-scale IT projects are cancelled prematurely more often than other types of projects. Furthermore, they frequently last longer than expected and therefore exceed their budgets as well. Roland Berger Strategy Consultants has conducted a study entitled "Keeping projects on track with launch management: Why large IT projects often capsize and project success is not a gamble". The study analyzes the reasons behind this phenomenon and describes strategies with which IT projects indeed achieve success. The study is based on the authors' long years of experience in managing, restructuring and reorganizing large-scale projects.

"A large-scale project is more than simply a project that lasts longer, has more employees and devours a bigger budget," explains Dr. Kai Bender, Partner in the Roland Berger InfoCom Competence Center, which conducted the study. "Managing large-scale projects involves mastering complexities on a scale comparable to medium-sized companies or even groups." Drawing on years of experience, Bender and Partner Gérard Richter, along with Project Managers Matthias Klinger and Dr. Claus Herbolzheimer, developed an approach for managing the quirks and problems of large-scale projects.

The risks: Why large-scale projects go awry

A glance at the newspapers nowadays is sufficient to discover a host of failed large IT projects. In fact, one in five IT projects is cancelled and about half of them last longer or become more expensive than planned. One reason: Nearly 50% of projects have no one to adequately attend to managing the project's risks and operations. In addition, the negative consequences of failure are often considerably underestimated.

"In assessing the damage from crisis projects, it is mostly only direct costs that are included, whereas the indirect costs are often much higher," says Claus Herbolzheimer. This holds true particularly for image damage. Good project managers therefore consistently incorporate corporate communication into project activities. For instance, language guidelines and a communication concept for emergencies can be drawn up in the preparation phase. "What sounds simple is no longer the rule," laments Herbolzheimer.

Besides a lack of risk management, a further handicap of large-scale projects is found in their extensive project duration; this increases the probability of greater difficulties. Besides, when IT projects last longer, their requirements often change, and these changes are too often not documented. As project size increases, so does the number of employees on it, which makes communication problematic. These factors, coupled with high time pressure, have a negative effect on carefully constructed planning and a clean project set-up.

The technological complexity of large-scale IT projects is also frequently underestimated. The technologies used are often new, or even first developed during the project, to exploit first mover-advantages. But if these technologies are not yet fully mature, then failure is a real possibility.

The way to success: concentrating on the launch

So there are certainly plenty of risks, but at the same time, plenty of opportunities to minimize them: "With careful technical work and launch management that is focused on the real goal, namely start of production and operations, companies can manage the risks," says study author Gérard Richter. "The danger that a capital- and time-intensive large-scale project fails is then significantly smaller."

Roland Berger experts have drawn up five guidelines for successful launch management:

• See launch management as a craft:
  Well-trained employees and integrated, comprehensive planning are needed from day one. Planning should include actual/target comparison, effective risk management, resource management distributed over several months, professional top-management reporting and constant interface management.
• Don't count on the best-case scenario:
  Handling client expectations openly and honestly is important, ideally beginning with the call for bids.
• Put together smaller project packets:
  The less broad and complex a project is, the easier it will be to handle. Spread large tasks out among several separate subprojects.
• Use tried and tested technologies:
  If new technologies are needed in the project, they should be planned and used with caution. When in doubt, rely on established standards.
• Promote open communication and clear decision paths:
  Reporting lines to the client and to top management must be defined and institutionalized. It must be made clear, who can make decisions and who should be involved in the decision-making process.