December 2011

Why Do Major Projects Fail?

Why Do Major Projects Fail?

This year there have been lots of disasters some of which have created little noise, perhaps because people had already assumed their failure.

You may be thinking of building those aircraft carriers that apparently cost more to cancel the contract than to carry on but which are now likely to engage the tax payers at about £7bn from the original budget of £3.9bn when the contract was awarded in 2008. Perhaps your mind was on the £500m spent on the network of regional fire service control centres standing idle a year after they were built and the project was cancelled (actually last year). But no, the one that has slipped through is the Department of Health’s £12.7bn project for a national health care system.

In September it was announced that a Department of Health review of the National Programme for IT has concluded that a centralised, national approach is no longer required, and that a more locally-led plural system of procurement should operate, whilst continuing with national applications already procured.

A new approach to implementation will take a modular approach, allowing NHS organisations to introduce smaller, more manageable change, in line with their business requirements and capacity. NHS services will be the customers of a more plural system of IT embodying the core assumption of ‘connect all’, rather than ‘replace all’ systems. This reflects the coalition government’s commitment to ending top-down government and enabling localised decision-making.

The review of the National Programme for IT has also concluded that retaining a national infrastructure will deliver best value for taxpayers. Applications such as Choose and Book, Electronic Prescription Service and PACS (Picture Archiving and Communications System for sharing X-ray pictures and scans) have been delivered and are now integrated with the running of current health services. Now there is a level of maturity in these applications they no longer need to be managed as projects but as IT services under the control of the NHS. Consequently, in line with the broader NHS reforms, the National Programme for IT will no longer be run as a centralised national programme and decision making and responsibility will be localised.

I’ll spare you the puffy statements from Ministers and associated cronies but what has really happened to the biggest civilian IT project of its kind in the world? It has already spent at least £12.7billion. Some estimates put the cost far higher. Some analysts say the sum would have paid the salaries of more than 60,000 nurses for a decade.

What has effectively happened is that following an official review, the ‘common standard’ IT project will be replaced by much cheaper regional initiatives, with hospitals and GPs choosing the IT system they need.

Now would you be surprised if I told you that’s what they wanted all along, down in the trenches they never really wanted a national scheme where patient records could be nationally held and accessed, no, each region (even down to the individual GPs in some cases) wanted to do its own thing. You may remember that the original patient record was watered down to a ‘Summary’ care record that contained not much more than name and address, medication and allergies.

Now I have to ask you this, how would you feel if the airlines, airports and Air Traffic Control systems all decided to do their own thing?

Now it’s not for me to go through all the problems here only to point out that very large publicly financed projects can and do go very wrong so we shouldn’t be surprised that the private sector also has its fair share of problems.

Peter Lunn in his book Basic Instincts has pointed out that in the land of economics we are always in danger of being MISLED in any transaction,

M = Mistake (and yes people do make genuine mistakes)

I = Information (and just think about it, the seller always knows more than the buyer, from cars to aircraft carriers)

S = Surprise

L = Luck

E = Event (some event may happen after the transaction is agreed that changes everything, you buy a gas guzzling car and the price of oil suddenly doubles – that happened to quite a few people)

D = Deceit (the other extreme from mistake, the other party sets out to deliberately fool you)

Much as I like this breakdown I think it suffers from a missing letter so I would go for MISLEAD, where the additional A stands for Agenda. In practice parties to a transaction often (invariably?) have their own agenda which may not be conducive to the project as a whole.

I would certainly apply this to many of the cases that lead to dismal failure when you think rationally they should have succeeded. I learnt at a very early age that it only takes one person to disrupt a project but it needs a whole team to make it work. If half the team doesn’t want it you might as well pack up and start again.

Of course in the private sector there are equally big mistakes even from successful companies, Google’s Gmail app for the iPhone and even Google + which is no longer the subject of Google fan fares. Google Offers sounds like a good idea (e.g. Groupon) but there would appear to be more detractors than supporters, “I don’t want to be molested on my phone by offers as I walk down the street, I need to ask”.

Google+ and Facebook are at the two extremes of social networking with Google arranging for you to only share the minimum and Facebook promoting the share all approach. But of course there are much bigger things at stake here, there is a war mounting between these two players over control of the internet, Google may be in the lead but Facebook should not be discounted and they are currently very much in Google’s way.

Closer to home is the Google Wallet but that is also having its share of problems. Still only available on the Google Nexus S phone (made by Samsung) and only supported by Citi’s Mastercard and Google’s Prepaid card although Visa has more recently agreed to join the game. Now the thing here is all about the secure element, so just two questions,

1) Do you need a secure element?

2) Where is the secure element and who controls it?

Well we could spend a day or more on just these questions alone, suffice it to say that in the short term at least (within 5 years) it’s difficult to imagine that anyone would accept the security risk of not using a secure element and equally it’s hard to see where and how that is going to happen. Also you might still not be too happy about the penetration of NFC which equally has probably got about 5 years (or more) to go.

Prophet has recently conducted a spot survey of some 5,000 U.S. consumers to see which brands they’d put on the death watch for anytime between now and 2015. Top of the list was Eastman Kodak (27%), with Netflix (19%) and the U.S. Post Office (18%). RIM with 14% of the votes was 4th and Sears came in 5th at 11%.

The interesting thing here is that brands do have a life time, just think about it, when did you first hear about Netflix and do you think it will still be around in 20 years’ time ?

RIM is of course one of the greatest concerns in our industry and it’s difficult to believe they will be around at the end of 2012 in anything like their current form and here I refer to “The seven habits of spectacularly unsuccessful executives” by Sydney Finkelstein.

We discussed the problems with RIM last month and all that has happened is that the financial analysts have descended on RIM with a vengeance. I would say that there is a large level of agreement that the company has lost its way and that something major needs to happen to put that right. "RIM reminds me of a beloved grandparent. You love them, but they are very outdated and sooner or later they will be gone," said independent analyst Jeff Kagan. A company that was once worth more than $70 billion now has a market value of less than $9 billion.

It’s particularly interesting that about a year ago we had the same thoughts about Nokia that used to be the biggest brand in the Mobile phone space. Will Microsoft be able to get them back into the smart phone arena? Perhaps not with that brand which has so far got a pretty poor reception in the world of mobile phones? People just don’t want Windows on their mobile phone so a bit of re-branding here could make all the difference.

In terms of the mobile phone market share we have,

US Mobile Phone Market Share

And looking at the popularity of the OS’s

And looking at the popularity of the OS’s

In late November, RIM introduced a software tool giving corporate customers the option of linking iPhones and Android devices to the BlackBerry network. However this doesn’t allow outsiders access to its data encryption technology. What people often forget is that RIM charges a monthly fee to every BlackBerry user which is a more reliable source of profit than shipping its own smartphones.

In this modern service world it is often said, “Why build a car when you can own the toll roads on which they drive ? ”

However this might be a step too far for today’s management who seem awfully committed to the QNX smartphone (Blackberry 10) now pushed out to Q4 2012, but let’s see what the year brings.

Patsy Everett, Smartcard & Identity News


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