Failed IT projects cost the world's largest 500 companies more than $14 billion a year. (National Association of Corporate Directors)
To gain competitive advantage and keep pace with regulatory requirements, organizations are undertaking an unprecedented amount of transformational change. The benefits of such big, IT-heavy projects can be great – but they’re not without risks. Failure to manage these risks successfully can have many adverse consequences, both operational and reputational.
What’s more, these initiatives have two inherent characteristics that add to the challenges:
- They require judicious selection. Organizations must balance a large portfolio of projects and choose efforts that align with both strategic goals and regulatory compliance.
- They’re complex. Changing IT infrastructures created over decades can’t be anything less.
PwC’s publication What is Internal Audit’s role in Organizational Transformation? has found that, despite the high stakes, these projects continue to struggle. Most independent research suggests typical IT project failure rates between 30% and 50% – a problem that’s gaining growing attention from boards, C-suite executives and Internal Audit. All these groups are coming to recognize the risks posed by large IT initiatives. They want answers to such questions as:
- Are we on-time and on-budget?
- Are we delivering the planned scope?
- Are we maintaining the integrity of our control environment?
- Are we going to have a positive return on investment?
Understanding the risks is indispensable to managing them. Three actions can greatly increase your odds for success.
Three Steps to Minimize Risk
These actions will help you reduce your company’s risks to the practicable minimum, and prepare you to deal effectively with them when they arise:
- IT Governance: good IT Governance sees the business and IT working towards common goals, with structures in place to mitigate the inevitable deviations from the plan.
- Program and Portfolio Assurance: an effective portfolio optimization and sustainment program can enable companies to achieve successful project management.
- Project Assurance: alignment of project scope with agreed business case and stakeholder expectations can help achieve quick wins that built trust, credibility and momentum for success.
As we’ve done with many clients, PwC can work with you to transform your organization, drive competitive growth – and avoid trauma. If your company is facing sweeping IT change call us.