EMBARGOED UNTIL AUGUST 26, 2005 AT 17:00 ET
Newswise — Last October, the giant British food retailer J Sainsbury had to write off US$526 million it had invested in an automated supply-chain management system. It seems that merchandise was stuck in the company's depots and warehouses and was not getting through to many of its stores. As a result, Sainsbury was forced to hire about 3000 additional clerks to stock its shelves manually.
This is only one of the latest in a long, dismal history of IT projects gone awry, according to IT consultant Robert N. Charette, writing in the September 2005 issue of IEEE Spectrum. Most IT experts agree that such failures occur far more often than they should. What's more, the failures happen in every country; to companies large and small; in commercial, nonprofit, and governmental organizations; and without regard to status or reputation. The economic and societal costs of these failures--in terms of wasted taxpayer and shareholder dollars as well as investments that can't be made--are now well into billions of dollars a year.
The problem only gets worse as IT becomes ubiquitous. This year, organizations and governments will spend an estimated US$1 trillion on IT hardware, software, and services worldwide. Of the IT projects that are initiated, from 5 to 15 percent will be abandoned before or shortly after delivery as hopelessly inadequate. Many others will arrive late and over budget or require massive reworking. Few IT projects, in other words, truly succeed.
Software failure is, for the most part, predictable and avoidable. Unfortunately, most organizations don't see preventing failure as an urgent matter, even though that view risks harming and maybe even destroying the organization. Understanding why this attitude persists is not just an academic exercise; it has tremendous implications for business and society.