ERP

Sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other innovations.”
– Steve Jobs

Innovate to stay relevant. Technology transformations, i.e., migrating or redeveloping business software applications developed in older computer languages and implemented on vintage technology platforms to contemporary platforms has become a mandatory and inescapable bane for IT companies and entrepreneurs. What was good yesterday becomes cumbersome to use today and will become impossible to maintain tomorrow. Hence there is a need to harness and integrate new innovations and discoveries in technology into your software products and solutions, so that they remain competitive, deliver enhanced value for money to your customers and help sustain your market share.

Timing matters

It’s extremely important to time your transformation plans correctly. Executing a transformation process earlier than your market’s capability or readiness to absorb the innovation would lead to necessitating higher investments in marketing the innovations. This is because maturity of customers to see value in the innovations is imperative if you are expecting faster returns on your investments. Conversely, inordinate delay in execution can wipe out the best of brands from the market eg: Nokia & Blackberry mobile phone instruments.

Why technology transformation projects fail?

Having embraced technology transformation as a mandatory activity, what is it that makes the journey a success or failure? Data gleaned from technology transformation projects states that 70 to 80 per cent of such transformation projects are prone to delays and budget overruns ultimately getting scrapped as failures (McKinsey experts estimate that 70% of Transformation Programs Fail).

Let’s analyse the most common and important reasons for such failures.

  • Inadequate build-up of business case
  • Lack of stake-holder belief leading to inadequate budgetary support
  • Insufficient planning and poor execution; lack of adequate review
  • Lack of adequate appreciation of risk & mitigation

Inadequate build-up of business case

One of the key factors that would make for a smooth transformation is the existence of a robust business case. Questions that would need to be answered are typically the following.

  • Is there a need for technology transformation or will existing products and solutions continue to have a market with minor enhancements?
  • Is there clarity on planned functional & technology enhancements and clear articulation of the benefits that would accrue to the customer?
  • Is the market ready for transformation? After all, apart from business expediency, from the market’s perspective, affordability is a key concern that rules the decision.
  • Is the target technology platform contemporary, easy to adopt and maintain and attractive for the market? Will the overall cost of implementation of transformation be sustainable for the target segment of the market?
  • Too many business cases exist only in the minds of the Project Initiator or Manager. They are never defended through open discussions nor are they critically appraised for feasibility prior to commencement of the transformation journey. As a result, such projects end up being an extension of misplaced dreams of an individual or a coterie and are thus more likely to be doomed.

Lack of stake-holder belief leading to inadequate budgetary support

Lack of stake-holder buy-in owing to divergent views regarding business case and risk-averse approach to commit additional investments is another reason for failure of transformation projects. Some of the key points of consideration here are:

  • Is there clarity of management sponsorship and budgetary commitment for entire scope of transformation programme? This is especially needed for multi-year transformation programmes where budgets are approved based on yearly spend plans.
  • Stake-holders need assurance that there is meaningful progress aligned to planned milestones and programme goals. If these are not satisfactory, invariably, there is nervousness to commit additional investments. Inexplicable delays and too many trial-and-error steps will erode stake-holder confidence and may result in investors/management abruptly shutting down projects.

Insufficient planning and poor execution; lack of adequate review

Insufficient planning and lack of an end-to-end view of programme deliverables leads to a false sense of progress and achievement clouding the actual objectives thus delaying mitigation steps. We must understand the following in this respect:

  • Failure to integrate IT Transformation with Business Transformation and seeing each in isolation is a recipe for failure.
  • Overconfidence to commission large, complex projects without adequate thought. Insufficient competency of team driving the transformation in technology, business domain and project management capabilities leading to mediocre all-round performance.
  • Insufficient oversight on the progress due to multi-tasking of key stake-holders leading to dilution of review mechanism.
  • There is a tendency to cut-corners or take incremental corrective steps in an ad-hoc manner whenever faced with problems during transformation projects. This will lead to losing overall vision of programme and misplaced sense of progress.
  • We are often prisoners of the limitations in competency of the team-members tasked with delivering the transformation projects which seriously impairs quality and timely delivery.

Improper risk identification & insufficient mitigation

One key competency that is expected in handling complex technology transformation is a comprehensive identification of risks and adequate mitigation strategy to overcome such risks. One must take into account the following:

  • Most failures are linked with the inability to correctly predict risks and inadequate risk mitigation strategy.
  • Large transformation projects need to be compartmentalised to ensure easier risk management strategies. This will aid taking informed decisions regarding short-closing of projects at logical milestones and safe-guarding of committed investments.

This blog is perhaps stating the obvious in terms of knowledge of typical challenges of transformation projects. The idea is to help overcome such known challenges and ensure successful transformation and not accept them as laissez-faire.

ERP