Computing Applications

Surviving It Project Cancellations

Reflecting on failure in IT—as elsewhere in life—is painful. But not learning from mistakes dooms us to repeat them.
  1. Introduction
  2. Coping With IT Failures
  3. Conclusion
  4. References
  5. Authors
  6. Tables

In a Forbes cover story, an investment banker expressed a preference for hiring former athletes, not because they are competitive, but “because they recycle so quickly after things go wrong” [12]. Their ability to quickly get past a failure, analyze what went wrong, and correctly adapt future performance is what sets them apart from other employees. While the ability to overcome adversity is a recognized skill of effective business professionals, its role has been neglected in the realm of IT project failures. This is unfortunate because failure is common: about 15% of all IT projects are canceled before completion [10], some with disastrous effects [1].

Project abandonment will continue to occur—the risks of technology implementation and the imperfect nature of our IT development practices make it inevitable. Therefore, we must learn how to effectively manage this phenomenon. To identify specific actions to help managers respond to project cancellations, we conducted a survey of seasoned consultants with considerable post-cancellation management experience. Cancellations are pervasive and their mismanagement can make a bad situation worse. These recommended actions can tangibly assist in surviving the aftermath of project failure.

Project cancellations are very costly, with damages sometimes exceeding millions of dollars [1]. Moreover, they may negatively affect the operational (and sometimes strategic) plans of affected organizations and can tarnish the credibility of involved parties. This is particularly true in situations where the failed system is important enough to attract the attention of key stakeholders, such as members of the board of directors, auditors, regulators, shareholders, customers, or even the general public. Publicized failures may jeopardize the careers of all involved.

These negative effects mandate prompt and effective remedial managerial responses to cancellations. Responding to project failures, however, is a complex and difficult undertaking. Senior executives—overly concerned with public relations and damage control—may limit the resources needed by the response team. Such executives want to avoid the appearance of wasting additional resources on a failed project and try to minimize its visibility by limiting the response effort. Even with adequate resources and managerial will, the needed organizational skills and knowledge may not be present. Coping with abandoned projects requires special skills that are quite different from ordinary IT development expertise [9]. Here, expertise analogous to that possessed by resilient athletes may come in handy.

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Coping With IT Failures

To effectively deal with IT project cancellations, organizations must ensure that three conditions are met. Their operations and other systems must remain unaffected; their reputation and those of their employees must be protected from unjustified attacks and scapegoating attempts; and appropriate changes must take place to reflect lessons learned from the experience. These three failure response objectives (operational containment, credibility restoration, and organizational learning) have been discussed extensively in the crisis management literature [5, 8, 9] and research shows they apply well in the case of IT project failures [6].

Meeting all three objectives as part of a comprehensive recovery strategy is of paramount importance. Failure to properly address all three can lead to a significant financial and/or reputational damage for the involved organizations and individuals [7]. For example, when the operations of an organization are not adequately protected from a project’s problems, the production and sale of products and services may be severely affected (such as the order entry system project failure of Snap-on, Inc., which caused $50,000,000 in lost sales), and may even drive a firm to bankruptcy (such as in the case of FoxMeyer Corp’s failed ERP system implementation) [1]. Failure to protect the reputation of the affected organizations or inability to pursue changes to solve a project’s problems can attract the scrutiny of external stakeholders and may tarnish the image and branding of the involved firms (such as in the case of the failed Confirm project, which resulted in several lawsuits of suspected fraud) [1].

By properly responding to IT project failures, firms can minimize the potential financial and credibility damage. Moreover, by pursuing appropriate changes in IT development policies and practices, firms can improve the likelihood of future project success, and at the same time demonstrate their ability to manage the post-cancellation situation while avoiding outside stakeholder scrutiny [4]. Given the importance of effective failure management, it is imperative to identify a comprehensive set of remedial actions as the basis of a recovery strategy by managers tackling project failures.

To identify such actions, we surveyed 36 IT consultants using a three-round Delphi technique. On average, each participant had over 23 years of IT-related experience, 16 years of which were as an IT consultant, and was hired over 13 times to manage project cancellations. In the survey, the consultants were asked to identify, comment on, and rate specific actions project leaders should pursue in response to an IT project cancellation. They identified and then ranked 18 relevant actions, which are listed in Table 1. In Table 2, the top 10 actions are described in more detail. To highlight their relevance, we next briefly discuss and categorize each one according to its focus on the three post-cancellation management objectives.

Containing impact. To minimize the impact of a cancellation, the experts recommend developing a contingency plan (#3), taking steps to protect the organization’s human resources (#7) and other IT projects (#9), while ensuring that vendors are held accountable for their mistakes (#10).

Recommendation 3 highlights the importance of satisfying the original business need that led to the initiation of the canceled project. It focuses on recovery planning and alliance of stakeholders. Properly addressing stakeholder needs is critical in mobilizing the needed resources to manage the cancellation [2]. Admittedly, this is a difficult task. As one consultant observed: “the launching of a brand-new project as part of this process may not fly in all situations given the recent failure.”

Recommendation 7 states it is critical to protect the affected human resources. Experts pointed out that “part of the management of a cancellation is to let staff know that they are not the problem, but the process is.” However, a few consultants opposed this suggestion. They indicated that it is sometimes necessary to dismiss team members responsible for the failure. They argued that justified dismissal of incompetent staff could signal “disassociation” from sources that contributed to the problem and can partially restore confidence [11].

Recommendation 9 proposes a review of other affected projects. Major cancellations can impact the rest of the IT development portfolio (due to factors such as resource availability changes and dependencies across projects). One participant remarked: “management will need to adjust the budgets, plans, and scope of several other initiatives as a result of the cancellation.” This could reduce the potential damage of the cancellation.

To minimize the financial losses to the organization, Recommendation 10 suggests holding vendors accountable for their responsibility, if any, for the failure. A few panelists opposed this suggestion, fearing it may turn into a “counterproductive exercise in trying to blame the vendors as an excuse for in-house flaws,” while others strongly favored it, not as “a finger-pointing exercise,” but as a “practical” approach.

Rebuilding credibility. To restore legitimacy, our experts recommended that involved managers: clearly and honestly communicate the failure causes and the remedial actions taken to rectify the situation (#1); prevent other IT services from being disrupted (#6); and be willing to accept personal responsibility (#8).

Recommendation 1 maintains that open communication is the “first priority,” as it is the key ingredient of an effective response strategy. Keeping users and executives informed about the response plans can ensure their support, and help reestablish IT credibility [3].

To prevent the “failure incident” from being equated with overall incompetence of IT professionals to deliver good services, involved managers must ensure that other IT services remain unaffected. This signals that the failure is an “isolated” incident, protecting the credibility of IT professionals [11]. Reflecting on the fundamental value of Recommendation 6, one expert observed that “this is a given; if an IT manager cannot do this, he/she should get out of the business.”

As noted in Recommendation 8, the experts thought the project manager should take appropriate responsibility for the failure. Most indicated that this would enhance the manager’s long-term reputation and trustworthiness. They advised that managers should not evade personal responsibility simply because of fear of punitive actions. On the other hand, several experts protested that since reprisal could potentially devastate a manager’s financial well being, this suggestion “ignores personal needs.”

Learning from failure. To enhance the learning value of a project cancellation, the panel recommended performing a post-mortem audit (#2), and using the findings to improve organizational processes (#4) and individual performance (#5).

In Recommendation 2, the experts stated: “the only way an organization can learn from its mistakes is to thoroughly understand them.” A post-mortem analysis can be an effective learning tool here. Managers, however, are reluctant to conduct such audits because they fear reopening old wounds and letting skeletons out of the closet [3]. As one participant observed “this recommendation sounds just too painful.” With this awareness, the consultants cautioned: “the post-mortem must be objective and executed as quickly as possible, while always maintaining an arm-length’s distance from those who were involved in the project.”

In Recommendation 4, the panelists overwhelmingly felt that unless both organizations and individuals learn from their mistakes they will continue to repeat them. One observed, “organizational blunders are the result of process problems and the only way to improve is through continual incremental changes and improvements.” The panelists also suggested (in Recommendation 5) that individual learning and the need for introspection are very important for IT professionals. As one stated, “I look at this in terms of credibility, as well as `carrying on’ as IT groups, in general, are suffering from a lack of credible performance.”

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Given the pervasiveness and the damaging effects of project cancellations, there is a clear need for a better understanding of how to manage their aftermath.

While the recommendations presented by the experts appear both relevant and actionable, we recognize that organizations respond to project failures differently depending on a number of contextual factors. Political climate, availability of resources, the project leaders’ power and prior project success record and other variables are likely to affect how an organization will tackle a specific project failure. To assess how such factors affect the propensity of firms to pursue the recommended remedial actions, and the effectiveness of these actions, additional empirical studies must be undertaken. Such studies will reveal the true value of the recommended actions and ways to improve their application and effectiveness.

Unquestionably, as an organization faces the predicament of a project failure, it must decide how to distinctively respond to it by considering its resources, limitations, and risks. While response efforts must always be focused, well targeted and swiftly executed, resilient managers will need to adapt the preceding recommendations to fit their specific situations. We believe that our set of empirically generated recommendations can assist such managers in forming the basis of their particular response strategies.

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T1 Table 1. Rankings of recommended actions.

T2 Table 2. Top 10 recommendations.

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    1. The best and the worst: Top 10 corporate IT failures in the 1990s. Computerworld (Sept. 30, 2002), 74.

    2. Dutton, J. The processing of crisis and non-crisis strategic issues. Journal of Management Studies 23, 5 (1986), 501–517.

    3. Ewusi-Mensah, K. Critical issues in abandoned information systems development projects. Commun. ACM 40, 9 (Sept. 1997), 74–80.

    4. Ewusi-Mensah, K. and Przasnyski, Z.H. Learning from abandoned information systems development projects. Journal of Information Technology 10, 1 (1995), 3–14.

    5. Fink, S. Crisis Management. Amacom, New York (1986).

    6. Iacovou, C.L. Managing IS project failures: A crisis management perspective. University of British Columbia, Ph.D. Dissertation (1999).

    7. Keil, M. and Montealegre, R. Cutting your losses: extricating your organization when a big project goes awry. Sloan Management Review 41, 3 (2000), 55–68.

    8. Mitroff, I., Shrivastava, I., and Udwadia, F. Effective crisis management. Academy of Management Executive 1, 4 (1987), 283–292.

    9. Pearson, C.M. and Clair, J.A. Reframing crisis management. Academy of Management Review 23, 1 (1998), 59–76.

    10. Standish Group International. The Extreme CHAOS Report (2003).

    11. Suchman, M.C. Managing legitimacy: Strategic and institutional approaches. Academy of Management Review 20, 3 (1995), 571–610.

    12. Walsh, B. He who loses, wins. Forbes (June 2, 1997).

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