Hello
Computer projects have failed for as long as there have been
computers. But now that most companies are only as stable as their
infrastructure, the consequences of information technology screw-ups
aren't easily disguised - they show up in earnings reports.
When IT goes bad, many previous jet-setters have to report their
first-ever financial losses. Others and run for bankruptcy protection,
as did drug distribution giant FoxMeyer Corp in the case below.
Computerworld did a study of multimillion-dollar IT disasters, and
quoted the following:
• "User companies like FoxMeyer often file tough-to-win lawsuits
against the vendors or consultants involved. Nonetheless,
collectively, users rarely seem to learn much from the episodes or
apply the lessons to future projects. "
• "All of the botched projects in Computerworld's Top 10 disasters
list were big and richly complex; many were the toughest IT projects
the users had ever tried. Five were hideously difficult enterprise
resources planning (ERP) system implementations. And failed due to the
usual IT system reasons i.e. miscommunication, hazy goals, "scope
creep," inept leadership, pitiful project management."
Bruce Webster, a director at PricewaterhouseCoopers in Washington said
of the report "We may be neck-deep in the New Economy and Internet
time, but you still have the same factors and the same failings," He
recently studied 120 IT lawsuits filed since 1976, and he said he's
convinced that most flops could be avoided if people simply knew the
time-honored best practices of systems development.
And lack of management is what seems to have contributed to the
disasters below
COMPANY: AMR Corp., Budget Rent A Car Corp., Hilton Hotels Corp.,
Marriott International Inc.
PROJECT: "Confirm "reservation system for hotel and system for hotel
and rental car bookings
WHAT HAPPENED? After four years and $125 million in development, the
project crumbled in 1992 when it became clear that Confirm would miss
its deadline by as much as two years. AMR sued its three partners for
breach of contract, citing mismanagement and fickle goals. Marriott
counter sued, accusing AMR of botching the project and covering it up.
Both suits were later settled for undisclosed terms. Confirm died and
AMR took a $109 million write-off. What seems to have happened here is
a classic case of the customer not knowing exactly what they want, and
the supplier not knowing exactly what to give them.
You’ll find a good run down here
(www.dcs.ed.ac.uk/home/adamd/essays/confirm.html
)
COMPANY: FoxMeyer Corp.
PROJECT: SAP ERP system
WHAT HAPPENED? A bungled enterprise resource planning (ERP)
installation in 1996 helped drive FoxMeyer into bankruptcy, the drug
distributor claims in lawsuits still pending against SAP AG, SAP
America Inc. and Andersen Consulting. FoxMeyer seeks a combined $1
billion in damages, but defendants deny doing anything wrong. The
lawsuits continue.
This seems to be a prime example of project creep - with change
requests being applied to the system with little thought of the
consequences.
There’s a great article here ( carbon.cudenver.edu/~j1scott/
publications/ScottFM99.pdf ) that concludes that faulty change
managment was the problem.
COMPANY: Tri Valley Growers
PROJECT: Oracle Corp. ERP and application integration
WHAT HAPPENED? A giant agricultural co-operative, Tri Valley bought at
least $6 million worth of ERP software and services from Oracle in
1996. None of the software worked as promised; some of it couldn’t
even be installed on Tri Valley ’s DEC Alpha hardware, the co-op
claimed in a $20 million lawsuit filed in February. Tri Valley stopped
using the Oracle software and stopped paying the vendor. Oracle
counter sued for breach of contract. Tri Valley filed for bankruptcy
protection in July. Oracle denies all claims.
What seems to have happened is that ORACLE tried to shoehorn a new
application onto old technology, and found out too late that it wasn’t
going to work.
You’ll get a full rundown here ( http://www.computingsa.co.za/2000/02/
21/International/int09.htm )
Hershey Foods Corp.
PROJECT: IBM-led installation and integration of SAP, Manugistics
Group Inc. and Siebel Systems Inc. software
WHAT HAPPENED? To meet a Halloween and Christmas candy rush, Hershey
compressed the rollout of a new $112 million ERP system by several
months. But inaccurate inventory data and other problems caused
delays, and that started to interfere with Hersheys distribution
network and stock delivery systems. Hershey sales fell 12%in the
quarter after the system went live - down $150.5 million compared with
the year before. Software and business-process fixes stretched into
the next two years. It all seems to stem from problems with the
original inventory data coming from legacy systems.( Data from legacy
systems is another prime source of failure in implementations )
You’ll get a full rundown here (
wps.prenhall.com/bp_laudon_essmis_5/0,,155354-,00.html )
The good news here is that Hershey have turned the corner and the
system now seems to run efficiently as you’ll see here
(www.computerworld.com/industrytopics/manufacturing/
story/0,10801,74008,00.html )
As for the successes, they tend to be a story of strong management and
risk control from the start of the project.
You’ll find in the IT press that everything gets reported as a success
as long as it gets implemented at all, never mind whether it brings
cost savings or benefits. Have a look at the google search (
://www.google.com/search?hl=en&lr=&ie=ISO-8859-1&q=%22IT+success+stories%22
) - you’ll find that there’s nary a hint of problems. You’d think from
these that none of the above disasters ever happened.
But despite the cynicism, there have been notable areas of IT success
(not least in home computing and the PC software environment in
particular). On the corporate front, big savings come in IT systems
installed in areas where traditionally paperwork was the most
time-intensive activities. To find examples of success therefore, we
should look at sites like banks, insurance companies and also
hospitals and other health care areas.
I actually know people who worked on what they regarded as "The Dream
Project", converting Barclays Merchant Services (a branch of Barclays
Bank) legacy mainframe systems to client server. This was a huge job,
as this quote from Barclays shows
"to replace the core processing and servicing systems, which had been
taxed to the fullest extent, and to meet demands that did not exist
when the system was installed 25 years ago while carrying forward a
wealth of legacy information. Handling close to three million
transactions from 130,000 merchants daily, the Darwin program was a
massive undertaking with roughly 20 consultants and 44 permanent IS
staff responsible for ensuring its smooth delivery. As part of Darwin,
BMS moved from IMS to DB2, from TCAM to CICS, and introduced Micro
Focus Cobol on a PC platform. As much processing as possible now takes
place on Unix servers while the mainframe still holds the core
database and handles high-volume batch processing."
Through tight management and flexible project control, they effected
an on-time, on-budget delivery that is achieving its stated benefits
and cost savings.
They state in their literature that the main reason for the projects
success was the fact that they developed a lot of reusable software
modules, which not only cut development and testing time, but brings
great benefits during subsequent system support.
You’ll get a full run down here
(http://www.netron.com/products/fusion/barclays_case_study.html )
It’s not only huge corporations that can make it work. As I said
earlier, health care systems are also a prime area of possible
benefits, and there’s a great example of how it should be done from
The Laurel Health System implementation of the Diabetes Electronic
Management System (DEMS) to better identify, educate, monitor, and
treat Diabetes in Tioga County. They won a 2001 Pennsylvania
technology achievement award for Best New Application for Older
Technology in a Large Company (over 100 employees)
You can see how they managed it here
(http://www.cpaccit.org/taa2001/laurelhealth/laurelhealth.htm )
And there’s also large scale work in the Healthcare systems area that
works when they get it right. You’ll find a good rundown of one here (
http://www.sierrasystems.com/client/success/workerscomp.asp ) It’s
done from the supplier’s viewpoint, but as they did get it in on-time
and under budget, I guess they’re allowed to crow.
I could go on about successes, but rather than fill up google, I draw
your attention to Bitpipe, a site where you’ll find a huge amount of
information and full case studies of implementations (
http://www.bitpipe.com )
And I’ll let you into a secret - I work as an IT manager, and, yes,
I’ve worked on some projects that failed. All the failures were the
result of bad management practices, and the most common cause was
project creep. My personal top tip for success is to master the change
control process right at the start - it’s definitely the key area of
any large project.
Hope this helps.
Willie
Computer World Article and Top Ten Disaster List
Companies Dont learm From pervious SNAFUs
http://www.computerworld.com/networkingtopics/networking/management/story/0,10801,53014,00.html
Google Search strategy
://www.google.com/search?q=%22large+system+implementation%22+success
://www.google.com/search?q=%22large+system+implementation%22+failure
://www.google.com/search?hl=en&lr=&ie=ISO-8859-1&q=%22healthcare%22+%22implementation%22+success |
