When Technology Runs Amok

21 Jul ’05

David Freedman has an article in the July Inc. on the difficulty smaller organizations have in making important IT decisions. Quote:

But those who sneer at the inability of lumbering bureaucratic government agencies to manage technology probably haven’t run a company. Because while having a computer-system development disaster take place on your watch may sound like reason for cringing in shame, it’s actually more the rule than the exception—the vast number of failed projects churned out at businesses just don’t happen to get the press. “More than half the large custom systems that are started never reach users,” says Joseph Goguen, a computer science researcher at the University of California at San Diego. “Usually they’re just canceled, but sometimes they’re declared a success and then not used.” Small and midsize businesses build these clunkers by the tens of thousands, too, he adds—and often blow a larger percentage of revenue on them to boot.

That’s what happened to Coast Guardian’s Moody. Six years ago, reeling from the costs and delays from the paperwork involved in running background checks on job applicants, Moody wondered why he couldn’t do it all online. He hired a systems developer. Two years and $20,000 later, the system still wasn’t working, and the developer had stopped returning calls. “I could have hunted him down, of course,” says Moody. “But what for? The money was gone. And $20,000 was a big hit to us then.”

To an outsider, runaway computer projects may smack of incompetence. But even companies with gilded technology reputations suffer mammoth failures—IBM, for example, participated in a mid-1990s project that helped burn $1.5 billion of taxpayer funds in a futile effort to revamp the nation’s air traffic control systems. And Goguen notes that when experts studied the costs of fixing failed computer projects, they found that only about 20% of the costs were related to problems with programming or system design. Another 20% or so were related to a failure to address the needs the organization had stated. But about 60% of the costs went into the real culprit: the organization’s failure to explain its needs. “The developers end up designing and building the wrong system,” says Goguen, “and they don’t realize it until they’re almost through.” Sometimes the technology people do a poor job of listening, he notes, but more often the failure is at the business end.

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