Successful IT projects are a miserable minority. According to research firm The Standish Group, in 2004 only 29 percent of IT projects succeeded, down from 34 percent in 2002. Cost overruns averaged 56 percent of original budgets and projects on average took 84 percent more time than originally scheduled.
These findings are no major surprise and they are echoed in our own research. What is more startling is that we found 58 percent of IT projects resulted in no tangible business benefit. So what’s going wrong?
Such broad failure suggests a fundamental problem with the way projects are managed. This is not helped by a distinct lack of high-level skilled project managers found within internal project teams. It is therefore inevitable that at some point, businesses look to consultancies to drive their IT projects.
Given the dismal statistics, this has so far proved a hit-and-miss policy. Understandably, companies approach outsourcing with some trepidation. They fear a loss of control and knowledge and in a stop-start project relationship this has its problems. They crave consistency and struggle to find it.
When consultants leave following a project completion they take a lot of valuable insight with them. Considerable time is spent analysing the business and this informed experience drains back into the consultancy, not the client.
Therefore the increasing frequency of IT projects poses a tough, cyclical choice: manage internally and be understaffed during the most important, intensive periods, or use consultants and watch them walk away with crucial experience?
We have found that demand for project management skills is increasing with 94 percent of UK and European businesses claiming project-based working is of critical importance to their business success. Yet less than 39 percent of businesses admit to providing project management training in-house. The argument to outsource is compelling.
Choosing consultancies is, however, a tricky business. There is a distinct lack of standards among project management consultants, plausibly one of the key reasons behind so many failures. While the Project Management Institute (PMI) has swelled to 150,000 members, project failure rates clearly show that standards have not risen. What is the PMI doing to improve standards? Very, very little that I can see. So how do you know who’s going to deliver, particularly with PMI members outnumbering small towns?
Companies need to look for consistency. They need to identify consultancies that can provide an on-tap resource to ensure that knowledge levels are not lost. This would also have to mean high-level project skills are always at their disposal, through the troughs as well as peaks. It overcomes the internal skills shortage with a view to making projects work, on time and on-budget.
This represents a fundamental change in the way businesses work with consultancies. They will start to see consultancies as an extension of their own organisation, retaining knowledge and skills for future deployments. The ad-hoc approach to projects should be a thing of the past, with the same consultants remaining tied to clients ready to go when a new project deploys.
Where project management is not a core competency, consultancies will inevitably offer better expertise and a safer route to successful projects. As the demand for project management rises, the challenge will be to design flexible partnerships that provide longer-term solutions. Eventually, stronger recognised standards may emerge, but for the foreseeable future, businesses must outsource with care.Dr Simon Rawling is global head of project management consultancy PIPC