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Why IT Projects Fail

Small and mid-size companies should consider a project management office approach to managing complex information technology projects.
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Information Technology (IT) project success rates continue to be depressingly low. The much-heralded Chaos Report found an overwhelming 66 percent failure rate across all IT projects. Ouch.

Insufficient deliverables, budget overruns, and missed deadlines all make small and mid-size business owners or managers skeptical of undertaking any new IT project. But if you stand back and look at the root causes, you will see that the real issue often isn’t only the CIO (if the business even has one), the IT staff or even the technology being implemented. It’s the lack of a solid Enterprise Program Management Office (EPMO) approach to managing complex initiatives.

The current failure rate is easy to predict -- with no “traffic cop” in place, an IT staff can quickly end up with too many projects (most not contributing to business goals) which overstretch the often limited IT resources. This results in missed budgets, late delivery and even implementations that don’t quite meet user specifications.

So what is EPMO, other than yet another acronym, and how can it be used by small and mid-size businesses? The reality for a small business is that it is even more critical to avoid “spinning wheels” by working on the wrong projects or failing to achieve the projects goals. he EPMO oversees the flow of all projects across your business, setting priorities and allocating staff to ensure the right projects, solving the right business problems, are implemented with the resources necessary to succeed. In most cases, it also manages the implementation to ensure quality and on-target/within-budget completion.

The unfortunate reality is that very few companies, big or small, currently have an EPMO in place, and even fewer have adopted one successfully. For many small organizations, the challenge is a resource issue. But the overarching principle of ensuring IT projects support and advance business strategy can be applied to any size business.

So how do you create an effective EPMO? One option is to create an EPMO from internal resources. Look at your team to see if you have a strong leader who will be able to make the transition from his or her current role into managing a robust new function. The right person will have political maturity, experience acting in an EPMO role and no other duties.

In a small business that lacks the resources to hire new staff or dedicate existing staff to an EPMO, there is often only one large, strategic project at a time. In this situation responsibility can be assigned on a rotating basis, so long as the people in rotation have the stature within the organization to be effective. At the end of the day there has to be one person accountable for actually driving results for each project. 

However, if your business is growing rapidly and the IT projects are essential to the business goals, it may be viable to hire experienced consultants to get the office underway and to provide an objective perspective that considers both functional and strategic issues. A consultant in this role must help the wary top management team understand the value the organization will gain from the move to an EPMO.

In either case, the EPMO must clearly understand and mesh with organizational culture and business strategies to minimize risk and disruption to the operating structure.

So what exactly does the EPMO do? Most EPMOs are responsible for at least the three following areas:

  • IT Alignment and Project Prioritization:  The EPMO acts as a counselor to the CIO, or IT manager, ensuring that all IT projects map to business strategy. At the same time, the EPMO must prioritize projects and resources to safeguard against an overstretched staff and unrealistic deadline expectations. The required time commitment for each project must be weighed against the business value that will be delivered. A project involving massive person-hours needs special treatment and scheduling because of the potential to distract and detract from an organization’s mission.
  • Project Support: The EPMO should provide project management guidance, support and recommendations to managers and staff teams implementing IT projects. This includes methodologies that standardize the implementation process and provide true project management discipline. Even the brightest IT staffers will often fall short in this area because of lack of experience, which is what the EPMO brings to the table.
  • Training and Mentoring: The EPMO must work to develop expertise within the IT staff to continually improve project quality. This includes both professional development training and individual mentoring.

A properly-built EPMO function can do a lot to reduce IT costs by streamlining project lifecycles and prioritizing critical projects to align IT with business strategies.

Remember that 66 percent project failure rate? An EPMO is not a magic wand that will make every IT project a success, but it will make sure your best and brightest IT resources are focused on the projects that really are the “must haves.”

Lisa Metcalfe is a Regional Practice Leader in the Technology Leadership Practice of Tatum LLC. Tatum is the nation’s largest executive services firm, providing financial and technology leadership nationwide.




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