The Standish Chaos Report (2020) states that 66% of technology projects end in either partial or total failure. The bigger they are the harder they fall, and business transformation programmes are amongst the largest, most complex initiatives that an organisation will ever undertake, certainly significantly bigger than your average technology project. Which is why so many transformation programmes struggle to meet expectations, with many going on several years past their anticipated completion dates and budgets.
A report produced by CISQ (Consortium for Information & Software Quality) in 2020, quotes a figure of $260 billion as the cost of unsuccessful IT/software projects in the US alone every year. Whilst this staggering figure illustrates just how costly project failure can be, we are left pondering why, after all the collective experience companies have gained in executing these types of changes, there is still such a woeful success rate?
It's fair to say that having been around transformation project portfolios for 25 years, there are many reasons that major business change initiatives hit trouble. Most of them are structural, entirely avoidable, and stem from a poor understanding of what transformation is, and how to make it happen.
The structural reasons for failure include:
Underestimating transformation
Transformational change is strategic, structural, complex, and involves numerous moving parts – it is therefore really, really hard. The biggest single reason for transformation failure is that organisations simply underestimate what the achievement of successful transformation entails. Many make the grave mistake of thinking they can run a transformation programme alongside business as usual without making special provisions for it, or for the people who work on it. Transformations are intended to create the future vision for those it affects – therefore each one must be treated as foundational and imperative, with a corresponding, significant level of effort and commitment to achieve it.
Leadership commitment and time is often underestimated
Transformation programmes are not like running business as usual operations – they are a totally different animal and require commitment and prioritisation from executive management. Transformation outcomes need at leastequal priority in the performance objectives of key stakeholders – they are the future of your business and need to be prioritised by everyone to reflect that. Backfilling key positions to free up capacity for change is a prerequisite – there must be high levels of ownership, accountability, and participation if any transformation programme is to be successful.
Transformation outcomes are insufficiently valued
Clearly defining your transformation outcomes and assessing their relevance by the time you achieve them, which can be several years hence, is essential. As is ascribing strategic, sustainable, measurable value to those outcomes – the organisation must fully buy into them at the outset and continue to do so over time. It must be prepared to bear some pain, and possibly delays and costs, to achieve them – valuing them highly enough because the change imperative is widely understood and accepted.
The transformation strategy is flawed
Organisations are often too impatient to take the time to produce a strong transformation strategy, resulting in something that isn’t fully formed. A key step is to flush the desired outcomes and objectives back through a realistic transformation roadmap (one that has benefited from a professional planning process) and into the strategy itself to ensure achievability. Measurability is also key – the ability to embed the benefits of the strategy into your resulting business model, and your P&L, is an imperative that many transformation programmes fail to adequately consider initially, or indeed throughout the programme lifecycle.
Weak / Optimistic Business Case
Business cases must stand up to rigorous, ongoing scrutiny – when things go wrong, sufficient contingency must be available to call upon without holing your business case below the water line. Its viability must also extend to coping with overruns and change – one simple way to do this is to model an extension of the peak programme burn rate for several months, or even years, to cater for delays resulting from scope changes, changing priorities and other factors. Stress testing a business case for pessimistic outcomes is another factor – tweaking the assumptions to increase costs and reduce benefits tells you the limits you must operate within before your case weakens.
Rushed, Unrealistic Planning
Some perceive planning as a lack of progress when, in fact, it is the cornerstone upon which successful transformations are built – poor quality planning will inevitably lead to suboptimal transformation results. A transformation roadmap provides a strong visual representation of your timescales and outcomes – but be careful to communicate it as a statement of intent, not a project plan. Be sure that your team has a robust plan which delivers the entire journey – don’t accept a plan for phase 1 and a commitment to do a plan for phase 2 “when we get there” – that seldom results in anything other than extended time and cost.
Scope and objectives are poorly defined
Defining the scope of a transformation programme can be challenging, merely because of the sheer scale of the undertaking. This can be compounded when that scope needs translating into one or many vendor contracts for the provision of technology, services, and so on. As your scope forms the definition of what you are delivering, it sets the baseline level of expectation against which any change must be managed. Therefore, it is imperative to define it as tightly as possible and translate that into workable contracts and plans. Inadequate scope definition will lead to misaligned expectations about objectives, accountabilities and responsibilities which, in turn, will create tension, increase risk, and ultimately slow things down.
The definition of success is poorly understood
What is success? Is it delivering the business case? Acquiring 1 million new customers? Or, perhaps, delivering a high-quality service which meets performance criteria? Whatever your definition of success, it is crucial that it is captured, agreed, and measured throughout the programme lifecycle. Achieving success is why you triggered the transformation in the first place – it is imperative to keep track of it and not deviate from your course without extremely good reason.
Inadequate governance and control in the face of pressure
Given the complexities inherent in most transformation programmes governance must be transparently executed and remain strong throughout, especially in times of pressure and stress. Weak governance will permit mission creep, reducing your strength of purpose, clarity of vision, and the chances of successfully accomplishing your objectives.
Failing to manage competing priorities
Throughout the lifetime of a transformation programme, the business environment will change, other priority projects will emerge, and stakeholders will move on. This is important as the desire to keep transforming can wither over time, and people can lose interest and want to move on to attractive, new projects. Ensuring the transformation remains at the forefront of your own, and everyone else’s priorities is vital.
Team working, team working, team working
Gelling teams, especially across different geographies and cultures, is always challenging – and it takes time. They don’t just magically turn up on day 1, get along great, totally understand one another, and leap to high performance levels. Team building requires effort to create strong relationships that will stand the tests of both time and stress. Engaging all the impacted groups to contribute to shaping the transformation programme is a great way to create effective teams and build buy-in to your mission and objectives.
Once you’ve engineered-in the right governance and structural approaches to your transformation programme, there are a whole bunch of things that can still go wrong. Here are just a few of the key things to watch out for:
Programme Management is hard
For all the investment in tools, software, qualifications, and approaches in the last 30 or so years, project success rates have largely plateaued. One conclusion you can draw from this is that these aspects are not what makes the difference between success and failure - Agile projects don’t fare any better than traditional waterfall programmes, for example. This indicates that executing large transformational change is challenging, and it takes a special breed of leader to take on the challenge, avoid the common causes of failure, and drive such a programme through to a successful conclusion.
Failing to cope with change
Ironically, change programmes are often amongst the worst entities at coping with change when it affects them. Linked to the point above about effective governance, transformation programmes can’t exist in a bubble for several years without having to adjust to circumstances. A failure to prepare for and accept the need for change often leads to an organisation struggling to evaluate and implement it in a cost-effective manner. Nothing slows down momentum like dithering over change management decisions – every month you burn on a large programme while waiting to take decisions costs a lot of money, and delays benefits realisation, so building a strong, pragmatic change management process will help you quickly assess and embrace changing circumstances.
Poor vendor management
Effective vendor management is a crucial activity on most programmes where you are reliant upon them for expertise, capacity, knowledge transfer, etc. It is worth investing time, effort, and money in writing strong contracts so that accountabilities and responsibilities are clear. It’s also worth having someone designated as the contract manager, responsible for overseeing execution of the working practices and deliverables, ensuring that they are fit for purpose. Failure to adhere to contracts is one way for a transformation to quickly spiral out of control, requiring significant expense and management attention to remedy.
Testing
When software is involved in enterprise transformation programmes, testing rigour is commonly not addressed until far too late in the lifecycle. Instead, when you define solutions, you should already be considering how they’ll be proven to work and tested to destruction. On enterprise programmes, a common shortcoming is a failure to pass sufficient migrated data through test cases to prove that a solution works effectively. Another favourite, particularly of large consulting firms, is to load all the test effort into the User Acceptance Testing (UAT) phase, the one phase where their client is normally contractually responsible. Clients are usually ill-equipped to undertake expert testing (that’s why you hire consultants) and, besides, this is poor practice. Your unit, system, and integration test phases should prove that the solutions work effectively, leaving UAT to be largely a user-driven affirmation of all the great testing that’s come before. In Agile developments, testing is near-continuous but still, many of these projects struggle as the overall burden of development struggles to produce a cohesive solution. During the delivery phase of major programmes, testing is where most delays are experienced.
We would argue that all these causes of failure are avoidable, so why do they continue to come up repeatedly? One reason is that, at the end of a transformation, the knowledge is lost to all but a few…………the transformation practitioners. Many who instigate transformational change have never previously led such an initiative and are encountering the causes of failure for the first time. Other leaders go through the experience once, are left with the battle scars associated with failure and although they have learned valuable lessons are unwilling to repeat what proved to be a very stressful experience. One final reason is that consulting companies have a knack of making money whether you succeed or fail. Rarely do you see a consulting firm with success criteria and payment schedules aligned to the success of your outcomes.
Therefore, the costs of failure keep happening - $260bn of them. One way to mitigate this is to employ experience, independent transformation professionals who have picked up the battle scars on previous transformations and therefore are well equipped to empower you to avoid them. They offer independent advice, can fast-track you through the lessons learned, and help your executive stakeholders take a realistic view of business transformation.
If you would be interested in talking to us about how you can minimise the risk and subsequent cost of Transformation Failure, please contact Claverton at info@clavertonconsulting.co.uk or by phone at 0117 325 7890.