Whose fault is it anyway? Why IT projects fail (Part 2: the supplier's fault)

United Kingdom

This article was produced by Nabarro LLP, which joined CMS on 1 May 2017.

Summary and implications

IT projects are complex, prone to delay and often fail to deliver the expected benefits, or any at all.  Whilst each project is different, the reasons for failure are often similar. Sometimes the fault lies with the supplier, sometimes with the customer, frequently both.

In this article, we look at common failings on the part of suppliers and steps which they can take to avoid them.  In a preceding article we considered failings more commonly initiated by customers.

1. The supplier overpromises

A response to RFP requires careful planning.  Poor planning can result in a supplier underestimating the resources required or dependencies.  Supplier resources may be spread thinly over other projects and care must be taken in considering the level of resource which can be (re)deployed to meet the needs of the project.  Estimation errors are in nobody’s interest.  Omission is far more significant as a source of error than variation, assuming the supplier is experienced and competent.  If something necessary is omitted from the response to RFP, change requests will follow and one party will have to pay.

Plan carefully and make sure your estimations of resources, cost and time for delivery are well documented to enable you to counter accusations of overpromising.  Expect your bid to be questioned by the customer and be prepared to explain your approach with confidence.  Remember that you may be called to account for the promises you make in the course of winning business.

2. Wrong consortium

A complex IT project may involve several technologies with one systems integrator taking overall responsibility for delivery, working closely with consortium partners and sub-contractors.  It is the responsibility of the systems integrator to ensure the partners work together effectively.  If they are unable to work together in a smooth and seamless manner, the customer will suffer the consequences of poor performance and delayed delivery.  Managing this risk is difficult and demanding (as SIAM practitioners are discovering).

Choose your consortium partners carefully.  Follow up references if you have not worked with them before.  Whilst corporate reputations matter, personal behaviour, skill and working style are more important in a team.  Ensure sub-contracts address governance and other key performance issues in a manner consistent with the prime contract.

3. The wrong sort of work

An IT provider may be a specialist and market leader in the delivery of certain projects, but its experience and capabilities may not be readily translated to different types of project.  The supplier should avoid exposing itself to the risks associated with delivering a system outside its general range of experience unless it obtains the appropriate resources or consortium partners.  We have seen disputes where a highly qualified supplier took on a project that was too large and diverse for its expertise, with disastrous consequences for both customer and supplier.  The customer’s market position, sponsor reputation and development cost can all be lost in these circumstances, and the supplier can suffer irreparable reputational damage.

Play to your strengths and select your projects carefully.  If there is a need, or desire, to undertake unfamiliar types of work ensure you have resources with the necessary skills, through training, hiring or consortium partners.

4. Poor project management

In large programmes there are many dependencies.  These frequently have elements that cannot be resolved with certainty.  They are amplified by the degree of novelty, whether technological, business model or associated with people change.  In these circumstances, project and programme management are critical skills with a direct impact on performance.  Formal qualification and interview skills are only partially reliable guides to the ability of a project manager to form a good plan, deliver, track and manage to it, manage stakeholders and risks.  In a complex project, experience is essential. A good project manager will be able to identify risks and issues as the project progresses and recommend an appropriate approach.

Ensure you appoint a project manager with experience and skills which are equal to the task in hand.  Resist the temptation to substitute a lower-cost alternative.  Delivery requires more than the leader, drawing on the contribution of all members of the team and maintaining support within the customer, support which is essential if the project is to succeed.  Ensure the project manager has an effective delivery team with the correct mix of skill, enthusiasm and experience.

5. Selecting the wrong technology

Whilst some RFPs will specify the technology required, often it falls on the supplier to make a recommendation.  It may consider the respective merits of an off-the-shelf or bespoke system.  An off-the-shelf system will generally be cheaper and easier to deliver but a bespoke package will offer more flexibility.  The wrong decision can have a negative impact on the project as a whole.

Select the technology carefully, ensuring that it not only meets the customer’s needs but is capable of integration with the legacy systems.  Be prepared to recommend alternatives if the customer is pushing for an inappropriate technology.  Scrutinise the selection decision, hiring someone independent of the outcome if necessary.

6. Requirements not adequately defined

The requirements of the new system are generally not specified to a level of detail sufficient for development until the supplier has been selected.  It is vital that during contract negotiation, the supplier and customer build their understanding of features, performance and outcomes together and that these are effectively reflected in the contract.  The business definition phase then generates the detail of process and design required to realise the result that the customer expects.  If these two exercises are not carried out diligently, the system cannot be delivered in a manner that provides the requisite benefits.  The customer has a significant role in both and may be assisted by a sourcing adviser, working on the customer’s behalf to ensure that the project addresses its needs. 

During delivery the supplier leads and facilitates the process, being accountable for its outcome.  Appropriate customer consideration and input is essential for success.

As a supplier, ensure you put the necessary effort into the requirements definition process and make sure that the customer equally commits to that process.  Do not let yourself be put in a position where requirements are unclear and you are building a system on unsettled ground.

7. Unstable delivery team

As with any project, continuity of resources is vitally important for successful delivery.  In a lengthy IT project it is inevitable that there will be some change in the delivery team.  However, frequent changes, especially at project management or workstream-lead level, can result in serious disruption, causing delay and compromising the quality of delivery.  A complex project relies on personal knowledge to understand dependencies and their implications.  This takes significant time to accumulate and can be lost in transition.

Maintain continuity of resource whenever possible and resist the temptation to reassign skilled and experienced resources to other projects.  If a change in the project manager is necessary ensure that the incoming project manager is more experienced than the outgoing one, in partial compensation for the fact that direct knowledge of the project will be lost.  Ensure that gaps in that knowledge are filled by existing members of the delivery team stepping up to the plate.

8. Failure to manage the customer

A supplier will want to ensure that the customer is satisfied with performance and will strive to meet the customer’s expectations.  However, acquiescence with unreasonable demands can give rise to serious problems.  A programme manager will expend considerable energy in engaging and managing senior customer stakeholders in a variety of departments.

Ensure the customer provides the necessary resources to make the project a success.  Insist on customer attendance at review meetings and engagement at the appropriate level.  If the customer requires changes to the delivery ensure such change is managed in a proper manner, through the change control mechanism if appropriate, and that the customer does not expect you to perform outside your contractual commitments.

This article is an abridged version of an article co-authored with William Hooper of Oareborough Consulting which was published in Outsource Magazine in September 2015, and is reproduced with permission.