IT Project failure analysis

When I searched the internet for IT failures, I was really astonished by the huge damages and high possibility of IT project failure.

I summerize some examples and list them in the following table.

Company Name	Company Description	Project Name	Financial loss	Negative Result	Year
UK government		public IT project, attempting to provide electronic health records for all citizens	$18.7 billion		2011
New York City		CityTime payroll system	$700 million	wracked by cost overruns	2011
Ingram Micro	massive technology distributor	an SAP project in Australia	15 million revenue drop		2011
Auto Windscreens	second-largest automobile company in the UK, with 1,100 employees and £63 million in revenue	a Microsoft ERP system		Bankruptcy	2010
Levi Strauss	a global corporation, with operations in more than 110 countries	a single SAP system	$192.5 million	Unable to fill orders and had to close its three U.S. distribution centers for a week; CIO resigned	2008
Kmart	Enjoy a competitive position with Walmart and Target	IT modernization project & supply chain management software	1.4 billion & $600 million	Bankruptcy and merged with Sears Holdings, shedding more than 600 stores and 67,000 employees	2000 to 2002
Hong Kong’s airport		flight information display system and the database for tracking cargo shipments	$600 million	Unable to give correct information of flight or cargo shipments	1998 to 1999

Data Sourse:
 [1] 10 biggest ERP software failures of 2011
 [2] Why Your IT Project May Be Riskier Than You Think

I just list a few examples of IT failures. As we can see from the data, the loss of IT failure can be dramatic and sometimes will lead the corporation to death. The projects' cost overrun is always the reason for these failures. The average overrun was 27%, but 1/6 of the projects can reach up to 200% cost overrun.[1]

I am really curious that how can this happen, how can the actual expenses exceed the budget that much. The case of Levi Strauss gives me some insight into this problem. It is said that one of its major customer, Walmart, required that Levi's new system should have interface with its supply chain management system, which is very difficult for Levi to achieve. This kind of situation may exist in many aspects of the business operation. Since those who make this IT investment has no idea about what the connections and interrelationship between other systems or parties, they made a wrong prediction of how long and how much it should take to realize the new system. So if we do have a holistic picture of the enterprise in technical, business, strategy prospective, we can have a better control over the IT project along with the business initiatives.

Another article gives me some information that 61% of managers reported major conflicts between project and line organizations; 34% of companies undertook projects that were not aligned with corporate strategy; 32% of companies performed redundant work because of unharmonized projects.[3] The article states that it is the lack of communication that causes most of the IT failures. From my point of view, it is efficient for employers to just focus on their responsibility but the decision makers should know the whole picture, including connections between different business lines and projects, then arrange the work properly to different funtional units, so as to realize its corporate strategy and goals.
Other statistics shows that 8% of data in organization falls in the category of ROT: redundant, obsolete and trivial. [4] So we need to find ways to share data beyond system boundaries.

Enterprise architecture, as a tool to illustrate and present all the functions and connections between different business lines from technology, business operation and strategy level, can give solutions to the problems mentioned above.

Reference
[3] The Root Cause Of IT Failures
[4] Learning from Past I.T. Failures