IFS Study: IT Project Failures Result In 2-3 Year Recovery Period

Jul 03, 2020 • News • Digital Transformation • IFS • Covid-19 • Market Research

Of decision-makers that experienced a digital transformation project failure, 25% experienced financial loss alongside a number of other damaging implications.

While today’s macro-economic disruption has failed to dampen digital transformation plans, when diving deeper into the ramifications surrounding project success and failure, the need to get transformation ‘right’ becomes imperative, according to a global research study from IFS .

THE long-term impact Of it project failure

While 58 percent of respondents plan to increase digital transformation spending, it’s the numbers surrounding the success of previous projects that demonstrate the severity of getting it ‘wrong’. The research highlights the long-term implications of IT project failure, with 34 percent of all respondents expressing it took two to three years to recover from project failure and 92 percent stating it took more than a year. Under the weight of today’s macro-economic pressures, businesses simply don’t have that amount of time to waste.

The reality is that, when IT programs fail, executive heads roll. The impact can be hard and long-lasting with damage felt across UK respondents in areas such as reduced headcount (20 percent), loss of customers (24 percent), financial loss (25 percent) and a loss of market share (23 percent). The latter results were consistent across the six global regions with a quarter experiencing both loss of customers and financial loss.

Those in the UK that experienced failures also experienced negative impacts including complete shutdowns of critical business departments (18 percent). The fear of failure impacted subsequent projects too, 26 percent were deterred from investing in similar projects, and half (46 percent) had budgets cut in other areas. In the face of COVID-19 recovery, and with the Centre for Policy Studies ‘After the Virus’ report championing innovation as a recovery response, the repercussions of such failures could be more damaging now than ever.

"While many people might assume that respondents concerned with the current economy would pull back on technology spending, the reality is that investment is increasing..."

While reported plans to invest in digital transformation indicate businesses are being proactive in the face of disruption, data suggests that making those investments will pay off. The majority of respondents said past digital transformation projects were successful, using a number of different assessment measures. Demonstrating that the benefits outweigh the negatives, success was achieved in on-time completion (71 percent globally) and delivering expected results (53 percent across all six regions).

While many people might assume that respondents concerned with the current economy would pull back on technology spending, the reality is that investment is increasing. The survey data indicates that, during these dynamic times, plans to increase spending on digital transformation tracks closely with concerns about economic conditions disrupting the business. In fact, the survey indicates that people concerned with economic disruption were 20 percent more likely to plan increased spending on digital transformation.

“The study confirms that many companies are wisely using the global downturn to divert resources to technological renewal and innovation,” IFS Industries Senior Vice President Antony Bourne said. “As the majority of businesses are adapting to the anticipated economic recovery, and not permanently scrapping digital transformation initiatives, there is reason to believe that companies with a progressive mindset toward technology investment will be well equipped to rebound. While enterprise software will doubtlessly play a role in accelerating recovery, it is important to remember its vital role in helping companies here and now. Providing the necessary process transparency and analytics to ensure effective and informed decision-making is critical in these trying times. Nothing less than a considered and resolute attitude toward adopting digital transformation will help companies thrive, now and in the future.”