It's a nightmare scenario for any chief executive: A long-term project turns out to be so far over budget and behind schedule that some stakeholders are threatening to go to the media. The second CIO since the project began has quit, and the contractors involved are running amok, each pursuing its own distinct strategy.
Sadly, this scenario is real: It happened at the FBI, as I noted in my blog last week. And it continues to happen in various forms to many large enterprises.
Another instance: Yahoo has hired a high-profile (and expensive) CEO, despite internal and external problems that are severe enough to have observers calling "Time!" for the beleaguered portal provider.
All of which prompts questions: How can an enterprise leader decide when to pull the plug on a costly project? And what are the signs that it may be time to consider doing so?
In the case of the FBI, we can see that the warning signs were legion. But so much had been invested in the project by the time it went off the rails, and the ultimate goal was considered to be so vital to national security, that the decision to press on seemed to make sense. Whether it could have been handled differently is open to question.
Determining when to end any project may involve comparing losses so far to potential future losses, then choosing the path of lowest risk. This technique can be the smartest way to go, especially in the case of technology projects, where failure can be massive. In a September 2011 article, Bent Flyvbjerg and Alexander Budzier write:
Any company that is contemplating a large technology project should take a stress test designed to assess its readiness. Leaders should ask themselves... is the company strong enough to absorb the hit if its biggest technology project goes over budget by 400% or more and if only 25% to 50% of the projected benefits are realized?... These numbers may seem comfortably improbable, but, as our research shows, they apply with uncomfortable frequency.
In the case of RIM, and also of Yahoo, the evaluation of risk is massive and many-faceted, extending way beyond a single project. This can make it even tougher to know when to pull the plug on the business as a whole. Adding to the difficulty are the personal feelings of board members, executive management, and staffers who may not want to see their work sold off or declared a failure.
Knowing when to end a project or terminate a business is never easy. It requires the utmost dedication to objectivity in assessing whether it's wiser to cut present losses or to forge on in the hope of greater ultimate gain.
I am going to have to research how the Curiosity project was managed.
What I do know is that NASA is definitely more of a swarm, using private contractors and in house. They've had many successes over the years, but some spectacular failures in the road to Mars and that usually reformulates the way they do things.
Also they now have a guy with Mohawk in Mission Control...so they can't be using Method 1.
ChrisTOP - This is all speculation of course, but perhaps the loss of objectivity and the bottom line may explain some of the decisions to forge ahead when it seemed as though the writing was on the wall.
There's a very human tendency to want to continue to invest in something that you've already invested a lot of money and effort in. Poker players have an expression: Don't throw good money after bad. If you're holding a losing hand, it's a losing hand regardless of whether you've already bet $1 or $1,000 on it. Betting more money won't make it better.
I'm relieved to hear that massive IT projects are becoming a thing of the past. No matter how well-designed, they seem guaranteed to overrun, place a huge drain on resources, and ultimately be superseded by other business requirements.
I remember being associated with a project in the past which cost a fortune, and was left to quietly expire after the person who commissioned it retired.
Xlnt point, jabailo. The lessons learned frm those big, old-fashioned and ungainly projects have surely been learned in many firms. But avoiding them requires change and new ways of working. That might be difficult for some enterprises. So I believe we'll continue to see the Big Project here and there for years to come.
You hit on a key point, hounhosp: Yahoo is still making some money. Whether it can grow as a cohesive business is another matter. But that growth, whatever it is, appears to be sufficient to keep the board hoping for better things.
Yes, objectivity seems to have gone out the window a long time back with Yahoo. It might have helped when the company was undergoing the loss of the Microsoft deal. It might have even helped with the subsequent first or second leadership changes.
At this point, objectivity would seem to call for something other than hiring a high-profile CEO and talking up a miracle cure.
At least I can clearly remember that for the past three years we have been going on and on about the dead of Yahoo! Do you remember that it even got in a partnership with Nokia, something that seems to have died, too? hmm
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Almost everyone agrees that data analytics, digital marketing, apps, and APIs will greatly affect their enterprise's results in the next 12 months. But a report suggests that not all large corporations are moving quickly to adopt these enabling technologies -- and that could seriously harm their profitability, customer satisfaction, and chances for ongoing success.
Enterprises are embracing open-source to avoid vendor lock-in, get better-quality software, and gain access to larger libraries of applications. In return, they may be putting themselves at risk for higher, more complex support costs.
Whereas some businesses search externally when they need a CIO, Choice Hotels had to look only at its CTO for someone with the necessary expertise, industry knowledge, and technological know-how to continue leading the company's embrace of enabling technologies.
Local social media can be powerful marketing tools, but they can't just be add-ons. They need to be tightly integrated into the corporate culture, according to Whole Foods social marketers.
Cisco's rumored sale of Linksys suggests we may have problem with innovation and profit at the edge of our Internet, and that could be critical to the evolution of many Internet-delivered services.
The very low-tech "scrum" project technique introduces "crowd talking" to projects and also sets the entire crowd to problem solving. So far, these new social-media-style meetings appear to have supercharged project execution.
Aneesh Chopra, the first federally appointed chief technology officer, discusses the Obama administration’s plans to help CTOs by improving the nation’s infrastructure, better harnessing research and development investments, and strengthening the country’s workforce; and how enterprise CTOs can assist the president with his tech agenda.
New York's Metropolitan Transit Authority is conducting a pilot test of digital kiosks to guide subway users to where they want to go more efficiently and at lower cost.
Big-data has become a big point of emphasis for many businesses. While the technology is available to deploy these applications, the needed personnel often is not. As a result, analytic engineers' salaries have blown past the six-figure mark, and hiring these experts has become a challenge for IT managers.
New tools like laptops, tablets, smartphone, and wireless connectivity let us work from San Diego to Katmandu, and anywhere in between. But time management remains a problem.
Showing results is the best way to win over social business doubters, according to Mary Maida, Medtronic lead information solutions manager. Internet Evolution's Mitch Wagner interviewed Maida at the E2 Innovate conference.
Software-defined networks, which deliver virtualization functions to enterprise networks, have the potential to dramatically change network design and significantly reduce costs and maintenance.
New York's Metropolitan Transit Authority is conducting a pilot test of digital kiosks to guide subway users to where they want to go more efficiently and at lower cost.
The whole Amazon.reader debate is a double-stupid. It's stupid to think that there's any e-book buyer who doesn't know Amazon's URL, and it was stupider to let ICANN launch the whole free-form TLD initiative to start with.
While NFC's original goal was to enhance mobile commerce applications, it is finding its way into a number of other uses, which is creating both opportunity as well as challenges for IT departments.
Enterprises would like to move to cloud computing but are hesitant because they are concerned about providers’ ability to secure company data. Here are some tips that help to ensure that if breaches occur, the business is not left holding the bag.
Edmunds separates customers into segments based on the info it collects on its site and from partners, and uses that to push out custom content, said Brian Baron, director of business analytics for Edmunds.com, at Predictive Analytics Innovation Summit.
The automotive website uses propensity modeling to target ads and customer registration forms, said Brian Baron, director of business analytics for Edmunds.com, at Predictive Analytics Innovation Summit.
Expert Integrated Systems: Changing the Experience & Economics of IT In this e-book, we take an in-depth look at these expert integrated systems -- what they are, how they work, and how they have the potential to help CIOs achieve dramatic savings while restoring IT's role as business innovator. READ THIS eBOOK
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