For many years, complex tech programs have continued to fail too often, ruining investments, damaging organizations and ending promising careers. There does not seem to be a learning curve.
To be clear: technology transformations are very hard to get right. A quick scan of the available research shows a consistently high failure rate of around 7/10 to 9/10, with Forbes stating that 84% of technology transformations fail to some degree, and that 50% just didn't go right at all. In our experience, the rate of failure increases with the size of ambition, investment, and complexity. Given each new year brings new technologies to master, this trend is unlikely to go away anytime soon.
The news is full of high-profile failing tech programs, though as you might expect, most failing programs are kept firmly out of the public eye. High-profile public examples include LIDL, a German retailer chain, that failed to implement a new SAP system over the course of a seven-year program – losing over €500m in budget. The National Health Service (NHS) in the United Kingdom ended up dismantling its National Programme for IT (NPfIT), after costs of £12.7bn. And, even worse, a German mail order firm had to file for bankruptcy after decades of successful business, partially because their large IT program did not perform, with a loss of over 1,000 jobs and the management team being sued.
The implications of getting tech transformation wrong can be existential. There are the obvious financial impacts of overruns from increased costs combined with delayed benefit, risks to business and customer disruption. Then there are significant impacts on job security – for the business itself, and for the CxO sponsor/investor responsible for delivering the change. Struggling programs have cost many senior leaders their jobs. Lastly, digital transformation can take its toll on the physical and mental health of all those involved. Sickness and turnover rates can rise sharply during major transformations. Overall, it is obvious that the total cost, including opportunity cost, for missed benefits from alternative investments is even higher than any figure published.
What do we mean by complex tech transformation?
Firstly, we acknowledge that there is no absolute definition because complexity is relative – what is simple for a native digital company with high change maturity will not be for another. But generally, complex tech transformation programs will have common characteristics. They will typically over-index on one or more of: size, scope, business ambition, geography, and cost, and aim for a 'revolution' in an organization's digital capability rather than an 'evolution'. A complex tech transformation will typically require multiple disciplines to succeed; for example, combinations of cloud, operating model, and product build. Inherent organizational complexity such as geographical footprint, operating model complexity, and technological variability all play a role.
Why do complex tech programs keep going wrong?
Experience shows that each step in a program's lifecycle can cause it to fail, from setup and execution, through to 'go-live' and recognition of benefit. Establishing a weak business case with unrealistic costs and benefits can be as damaging to a program as selecting the wrong strategic partners and suppliers. Defining the suboptimal program operating model to drive staff, partners, and suppliers across multiple geographies can be as damaging to your program as selecting the wrong technology for your organization.
To give some examples: a Financial Services firm had been struggling for two years to deliver a highly innovative onboarding capability.The many troubles of the program could be traced back to the very early decision on whether to proceed with the program in the first place. Unrealistic cost estimates led to the program being under-resourced in critical product owner, technical architect, and developer roles, which meant that even the earliest deliverables were late and of poor quality. Had proper scrutiny been placed on the original business case bysuitably skilled individuals, then many difficulties downstream could have been avoided. A global firm engaged multiple global systems integrators without establishing the right program delivery model, and without ensuring sufficient capacity and competency was in place to implement a major ERP upgrade, which led to expensive delays. A Financial Services firm struggled to deliver a revolutionary modernization of its way of working, partly because the network of stakeholders, third parties and associated companies did not buy into the need to change in the first place. Further, it seems that simply the duration of programs which often span multiple years is a challenge; they are often true marathons for organizations. Keeping the relevant key personnel fully engaged in a program often does not happen and creates a new set of problems.
It is precisely the fact that so many reasons can cause complex tech transformations to go wrong that we write this series. As specialists in complex tech transformation, we know first-hand how hard it can be to deliver successful tech transformations. It is our aim that readers can benefit from our experience in this fascinating discipline and avoid some of the common pitfalls.
Success stories
Of course, while many fail, it is worth remembering that complex tech programs can go very well. Not only well-known technology brands that consistently harness technology to deliver value, but also companies that do not necessarily have technology in their DNA achieve remarkable success.
Some of the true success lies with the traditional companies that have modernized and transformed themselves into digital first companies.Nestléimplemented the SAP enterprise resource planning (ERP) software across its global operations and managed to streamline business processes and improved efficiency in various aspects of the company's operations.Domino's Pizzasuccessfully completeda large-scale digital transformation to enhance customer experience and developed a robust online ordering and delivery tracking system. This increased sales and customer satisfaction. Various large cities around the world have undertaken tremendous IT programs to become "smart cities". For example,Barcelona implemented a comprehensive smart city program that includes IoT sensors for monitoring traffic, energy usage, and waste management, leading to improved city services.
If you would like to talk to someone about a program you would like to get going, or if you have a program that you are concerned about – get in touch. We have a global team of specialists, who can help you with the setup and delivery, provide assurance of your program, or if your program is in real trouble, help you to rescue it.
Stay tuned for our next article on how to master complex tech program setup.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
