Factors Affecting IT Implementation – Part 3

1. Factors Affecting IT Implementation – Part 3 Class 9 – April 27, 2012

2. Factors that affect IT implementation • Why Information Technology Projects Fail • Public sector IT failure is not rare • Typical reasons for failure are: • Complexity – projects are too large and complex • Commitment Failure – lack of commitment to the project from stakeholders • Planning Failure – creation of poor business plans • Vision Failure – underling assumptions are unrealistic • Inappropriate Methods – agency methods may not match IT – bleeding edge tech not always the best answer • Short Time Horizon – unrealistic schedules • Turbulent Environments- rapid rates of change can beget lack coordination and system failure – requires proactive, flexible leadership style • Failure to Support End Users – end users have no incentive to use the technology or are unable to use it

3. Factors that affect IT implementation • Projects are often • Late, • Over budget • Do not achieve functional objectives, or • Are cancelled. • Happens in private sector, too, but public sector more concerned with accountability and less prone to risk-taking. • Standish Group study – 80% IT projects late or over budget, lacking functionality, or never delivered. • 3 of 4 late with budget overruns of 200% • 2 of 3 ended without implementing originally scheduled features or functions • 3 in 10 cancelled • Success rates: • Retail 59% • Financial sector 32% • Manufacturing 27% • Government 18%

4. Factors that affect IT implementation • What conditions favor success of IT Projects? • Common conditions of management success are: • Management Support – active involvement of top management • Stakeholder Motivation – typical resistance to change must be overcome by convincing stakeholders of the benefits • Goal Clarity – project scope must be clear • Support for Organization Culture – the more change, the more resistance • Participatory Implementation – employee resistance factor • User Friendliness – a way to increase stakeholder motivation • Adequate Budget and Time Horizon • Phased Implementation – extension of goal clarity – milestones as clear, measurable targets; testing, piloting • Process and Software Engineering – dealing with legacy systems • Project Management – professional is better

5. Factors that affect IT implementation • What conditions favor success of IT Projects? • Training is an important component for success of IT projects • There is a direct correlation between the amount of attention and resources devoted to training and the success of implementing IT • The main aim of training is to make staff feel competent using new IT • Training requires time that is almost always taken from other tasks – this requires the support of management and contingency for handling work displaced • Timing is important in training – too early or too late can affect success • Development of a supportive culture for training and development is essential

6. Factors that affect IT implementation • What conditions favor success of IT Projects? • There are external factors of success too. In this, The agency’s environment can be a major determinant of IT success. These factors include: • Partnerships with Vendors and Other Strategic Partners • Partnering can often tap into knowledge bases unavailable inhouse. Partnering can be short term or long term. • Creating Independence from Vendors • Project implementation is more likely to be successful if the agency is not dependent on the vendor. • Agencies should avoid allowing contracts to deplete the in-house staff to a point where in-house expertise to evaluate contracts is either limited or even eliminated • Accountability to the Political Layer • IT projects will be more successful if long-term funding is secure and the benefits made clear to the political funders

7. Evaluating IT implementation • To evaluate an IT project, we typically undertake: • Cost Benefit Analysis • Return on Investment • Benefit and Cost Analysis • Identify the benefits of the IT Project • Identify criteria for evaluating benefits • Identify Tangible benefits: Identify the potential material benefits (e.g. labor costs saved, materials saved, time saved) due to IT project • Identify Intangible benefits: Identify the potential non-measurable benefits (e.g. long term value, simplification of procedures, reputation) due to IT project

8. Evaluating IT implementation • Benefit and Cost Analysis [continued] • Identify the Costs of the IT Project • Identify all tangible costs [labor, material, hardware and software, training] • Identify depreciation of facilities, equipment, and software • Identify any lock-in effects to vendor (i.e. alternatives if the vendor fails) • Life Cycle Costing is an important aspect of cost evaluation. This includes taking into account ownership costs such as operations, maintenance, and disposition.

9. Evaluating IT implementation • Benefit and Cost Analysis [continued] • Cost measurement – total cost versus marginal costs • Marginal costs means consideration of only those costs in excess of existing costs. • For example, if your total IT staff is 10 people at $60,000 each, total cost is $600,000. If the new project requires only 1 additional IT staff, marginal cost related to staffing is only $60,000.

10. Evaluating IT implementation • Return on Investment (ROI) • ROI typically focuses on tangible benefits. • ROI calculation focuses on quantitative indicators. • If we invest $1, what return would we get? • If we get $1 back, no benefits or costs • If we get less than $1 back, there are more costs than benefits (hence project may not be carried out) • If we get more than $1 back, there are more benefits than costs (hence the project is likely to succeed) • However, calculating the above is often difficult in the public sector due to accounting for intangibles. • In the public sector, intangible benefits of IT can be as important as the tangible ones. • These would include such items as client and citizen awareness, participation and satisfaction, upholding democratic accountability and transparency, policy consistency, more effective targeting of services, staff morale and improving citizen choices.

11. IT Evaluation Activity • Cost benefit analysis • Simplified ROI • No discounting for this activity • Work in teams to prepare • We work through analysis together