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Technology

This is what really causes corporate technology disasters

Technology is integral to how we operate almost every aspect of business today. Yet almost every director has experienced a technology disaster in one way or another, whether it’s a large budget blowout or a project that just didn’t deliver the promised value to the business.

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Technology is integral to how we operate almost every aspect of business today. Yet almost every director has experienced a technology disaster in one way or another, whether it’s a large budget blowout or a project that just didn’t deliver the promised value to the business.

In the interests of helping provoke a discussion around the causes of enterprise technology disasters, here are some of the major symptoms of an impending tech disaster that I’ve seen over the past 20 years:

Symptom one: Lack of clarity and vendor push

One of the biggest symptoms of an impending technology disaster is a lack of clarity around the outcomes that need to be achieved and the value that needs to be delivered. We don’t clearly specify the critical outcomes of the project, which means what is critical may be sacrificed on the altar of speed or price.

To avoid this, directors and decision makers need to carefully and clearly define what their objectives and priorities are for each project. Ideally you will have a checklist of the top priorities for value creation that is referred to when making decisions on the IT platform. This ensures that some programmer somewhere isn’t in the position to leave something out or go with something else just because it’s expedient.

Lack of clarity can also enable vendors to push and oversell their products particularly where the purchasers of that technology are not well enough informed. Many businesses place an extraordinary amount of trust in their vendors but the vendors are only going to give you what they have to sell.

If they don’t have something off-the-shelf that is quite right then they’ll cobble together this box, that box and that box, package it and tell you they have a solution. This vendor push is not necessarily the best solution, and if it omits something that’s really valuable to your organisation, then they’re probably not going to tell you.

That’s why clearly stating your objectives gives you a starting point to select the right vendor, hold them accountable, and ensure you receive the value you need the project to deliver.

Symptom two: Conservative decision making

Charles Macek, a well-known director in Australia, once said “there is more risk for a middle manager to take on a $100,000 project than for the board to take on a multi-million-dollar disaster, because the board probably won't be fired when it goes pear shaped but the manager most likely will”.

The result is too often the risk is shifted upwards, and the people who potentially could come up with innovative ideas or lower cost solutions have little incentive to do so. Whilst we’re reducing risk for any one individual, the net result is a substantially higher cost and risk profile for the organisation as a whole.

In too many cases we are simply not open to innovative solutions even where they may be quite low cost and quick to deliver. If we are going to embrace the world of innovation and change, we have to find ways of being able to embrace new ideas, take advantage of our own supply chain of great Australian entrepreneurs, and great innovations.

Symptom three: Technical expertise presents a language barrier

Too often there is a lack of quality and rigour in the conversation at the board level around IT strategy, IT procurement and understanding the value of an IT Project.

This conversational barrier is often due to a lack of skills and a lack of confidence in the directors and senior management to engage in discussion that rigorously challenges the tech strategy. This can impact the level of technical excellence of the CIO, because boards often seek out someone to fill that role who can talk business language rather than someone who necessarily has the level of technical excellence that the business requires. It’s hard to find someone who can speak both languages and talk across that divide, so rather than learning to speak the technical language, boards opt for a competent translator instead.

The problem is that complex businesses need that technical expertise, and even if you hire a technically excellent CIO, they can’t have a conversation around technology with themselves. They need other people on the board and in management who they can debate and discuss the issues with. It's very hard to get a board or management team to engage in a discussion when they don't feel confident in their own knowledge, so too often they favour discussions they are comfortable with.

It’s not just luck that we have a lot of discussion in boards around finance because we put a lot of financial people on boards. The same way any director has to have financial knowledge, any director now has to have some technical knowledge and an ability to engage in the discussion around what makes a good project and what delivers a good outcome.

Symptom four: Misunderstanding the difference between IT and digital

Many directors have a poor understanding of the difference between IT and the world of digital. The digital world isn’t just about being able tweet or the more banal aspects of social media, it’s not even about new technologies. It’s about taking technology forward from the back office to change the customer experience. This is a leap that I see many boards and management having problems with.

The new economy is increasingly engaged in peer-to-peer or customer-to-customer service delivery. In contrast, IT systems have historically been about back office efficiencies. As a result, most enterprises have an IT team that’s heavily focused on areas away from the customer. Technology teams that aren’t truly comfortable with the customer side of the business are far too common.

To embrace this challenge every board needs to sit back and ask “what would our company look like if all of our interactions with customers happened digitally? What would it look like, what value would that deliver to our customers, and what is the key value proposition that we could deliver to delight our customers more than anybody else?”

That doesn’t mean to say that your business has to make every aspect of digital transformation a reality. However, you’re almost certain to fail if you force a backward looking IT team into the digital realm without a holistic rethink about why and how you deliver value.

In conclusion

Technology is no longer something that can be allocated to one member of the board, or be left to the experts to sort out, and it’s too fundamental to how business operates to put our heads in the sand.

In order to avoid technology disasters board members and management need to address their shortcomings with regards to technology, and take responsibility for ensuring they don’t fall victim to the same traps that have caught many organisations in the past. The consequences are simply too great to ignore.

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