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Measuring the Business Value of IT: Failure Analyses

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Examples of IT failures are plenty, but what can you learn from them? This chapter from "The IT Payoff" lists the key pitfalls that lead to IT failure, and how you can avoid them.
This chapter is from the book

"Failure is only the opportunity to begin again more intelligently."

Our earlier discussion on the IT paradox presented the case advanced by some analysts and commentators that IT investments do not return their value to a company in the form of a measurable payoff. The mere fact that there was no measurable payoff does not imply an IT failure because the objective of IT investment might be to protect market share or avoid legal exposure.

On an anecdotal level, the examples of IT failures are plenty. Oftentimes, failures are very valuable teachers—teaching in a manner deeper and more lasting than if the project was a breeze-through success. This chapter is about looking at lessons of IT project failures in other organizations and learning from them.

Timing is Everything

The timing of the IT implementation decision is one of the critical factors that affects the success or failure of a project. Sometimes, just pushing back the implementation by a week might have had very different consequences. Case in point: Whirlpool Corporation's implementation of an SAP ERP system. According to SAP AG officials,1 Whirlpool should have delayed the "go-live" date by a week knowing that certain red flags had been raised. The red flags involved two batch-processing transactions that were taking a long time to feed into the decision support database and the customer service system. However, Whirlpool wanted to take advantage of the holiday weekend and kick off the implementation before the end of the year, and went ahead with the implementation. The rest, as they say, is history. The result was a shipping system that went completely awry and had shipments sitting in warehouses with some stores having to wait six to eight weeks before receiving their shipment. The lesson learned is that it is much more important to have a complete product than to be on schedule, especially in light of red flags observed. This is pertinent advice because we see many projects go live with red flags.

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