The True Cost of IT Project Failure: People, Processes, and Technology

Projects are undertaken with a vision. Many of them fail. 

Every failed project has a story of its own.

Each year, over $3 trillion is lost on failed IT projects. While many leaders blame it on every evolving technology landscape, or poor partnership management or even complex workflows the truth is a little more nuanced.

70% of Digital transformation projects fail and they fail not because of technology alone but also because of people and process.

The real tragedy isn’t the missed market opportunities or wasted dollars alone—- it’s the people being burned out, the trust eroded, the innovation and the effort that never sees the light of the day. These failures often make it impossible to recoup time, effort and money spent. 

Storm before Go-live ?

National Grid is a leading energy company headquartered in Northeastern U.S. With massive operations in the UK and US, they aim at providing clean energy as a part of their growth vision. They set out to modernize their business operations and move away from their legacy operations with a new modern solution. Aimed at improving efficiency the system was scheduled to go live on November 5th, 2012—-just days after the disastrous Hurricane Sandy.

Despite having clear indicators that the newly built system was not up to the mark, the management proceeded to go-live to avoid a projected $50 million overrun and regulated delays. 

The results—disastrous.

Payroll errors left scores of employees unpaid or inaccurately compensated. This led to $8 million in overpayments. Over $12 million in legal settlements. Furthermore, 15000 vendors were left stranded as their invoices went unprocessed which led to massive operations failure. Even financial reporting suffered as monthly book closing that took 4 days ballooned to 43. This crippled the company to maintain their cash flow. This case highlights the dangers of pushing forward an immature transformation factored by external pressures without having a complete clarity on outcomes.  

It’s time to take a closer look at the true cost of project failure—and what we can do to prevent it.

Technology is extremely effective. It remains effective because of the people who run, manage and keep refining the process behind it.

People, process and technology are intertwined.

Your IT projects need a holistic view for being a success. Have you put a lot of emphasis on rational factors like your budgets, internal process and existing hierarchies? These rational factors are one of the most common factors for project failures.

People, process and technology must be viewed in unity for successful project implementations.

Every project is as strong as the people involved in it. Unfortunately the people related issues are often overlooked.

People: The Hidden Cost of Project Failures.

A project usually starts with people. But it could also end there. Understanding people related issues are paramount when it comes to delivering a successful project.

As Elon Musk (Tesla, SpaceX) quotes- 

“Talent is extremely important. It’s like a sports team—the team that has the best individual player will often win, but then there’s a multiplier from how those players work together and the strategy they employ.“

Let us dive into factors related to people that cause a project to go haywire. 

Misaligned Leadership.

When leadership teams aren’t on the same page, confusion reigns. Understanding goals and KRAs of different leaders, understanding individual business priorities and adding clarity to the project is important. Scattered approach leads to project failures. This leads to project creep and misallocation of resources. Lack of buy-in from stakeholders also hampers project adoption. 

Leadership clarity is mission-critical in the era of AI, agility, and digital transformation.

What Leadership alignment looks like- 

• A shared vision of success across all stakeholders
• Clearly defined roles and responsibilities across functions
• Regular sync-ups and course corrections
• Open forums that facilitate cross-functional visibility and decision making. 

Skill Gap

You can invest in the most advanced tools, sophisticated platforms and the best strategies, but if your team is not equipped with the right skillset the project is all set for failures. Skill gaps exist when the right set of competencies are absent in project execution. It is not just about technical competencies, clear communication, tool knowhow and digital literacy is also equally important. 

The impact of skill gaps range from delayed timelines, underwhelming outcomes, team burnouts and lack of motivation to perform. Progress is further impeded by lack of communication and collaboration. 

Resistance to change

People naturally resist change. Change becomes a roadblock especially where there is poor communication. Many leaders treat change management like a checklist, it is far beyond that.

It is bringing people together, communicating right and supporting calls and initiatives throughout the course of the project. Resistance to change can manifest in various forms like non-compliance, active sabotage or simple lack of enthusiasm for the project. It has to be dealt with empathy and structure. People often prefer familiar methods, even if they are inefficient. This is because change can lead to uncertainty, which in turn causes people to hesitate. People resist what they didn’t help create. Exclusion from the decision-making process ultimately reduces buy-in.

Lack of collaboration

Effective collaboration and communication are cornerstones of a successful project. When team members don’t work well together or fail to communicate effectively, misunderstandings, delays, and conflicts can arise, hindering progress and jeopardizing outcomes.

The human cost of project failure can be substantial. Damaged team morale results in decreased productivity, increased absenteeism, and even mental health issues. Furthermore, recovering from damaged morale is a slow and expensive process. People problems also cause burnout, high turnover, quiet quitting, and distrust in leadership.

Process: When Planning Fails, So Does Execution

A brilliant idea with poor execution still results in project failures. Understanding the importance of a well thought and documented process is important. Great ideas need great execution strategies.

Scope Creep

It is the main reason for project failures. Without a strong process to manage projects even small adjustments snowball into complete chaos. This leads to project delays, shoots costs over the roof and causes deviation from original goals and objectives. What starts as a  well planned initiative soon plummets as new features, requests or changes are added to the project. These changes often feel harmless but it doesn’t take into account corresponding adjustments to time budget or resources. 

The process needs to also define elimination of vague scopes, unwanted stakeholder pressure, non-objective change requests and poor communication. Educating stakeholders of the changes is also important, as many fail to understand the sublining layers of dysfunction a new request may cause. 

Lack of Communication

Departments usually work in silos. Emails get lost or unanswered, meetings go nowhere. RCAs take a front seat. All because of the lack of clear structured communication. Without clear communications projects usually break down quickly, leading to delayed deadlines, increased misunderstandings and friction between team members. Poor communication could also lead to lack of trust further hampering transparency and morale. 

Lack of Governance

Every project team needs more than good people and strategy, it needs clear governance. Lack of defined ownership, decision-making authority and clear structures for oversight and change management even the best planned initiatives can go off the rails. 

The cost of poor governance could impact project deadlines, missed opportunities, confusion amongst stakeholders and wasted efforts. Governance is of utmost importance for a project to succeed when the project is under stress. 

Creating an accountable culture within the project team also helps establish a strong governance. 

Inadequate Risk Management

Every IT project no matter how well planned it is carries risk. Changing stakeholder requirements, integration challenges, vendor delays, security threats, regulatory or compliance changes and technology limitations all carry significant inherent risk. Teams that usually jump into execution without much thought to these risks. They have to be tracked and revisited every milestone. Someone should be appointed or take responsibility for mitigating these risks. Usually risks also threaten the delivery quality of the project.

Risk is inevitable, but unpreparedness elevates it. 

A strong risk management could turn events into opportunities of agility, foresight and resilience. 

The Process Price Tag

Poor processes come at a price. These costs could be spread across a wide spectrum of time, money, resources, delay and frustration amongst team members. Poor processes are silent culprits. Inefficient, outdated and overly complex processes kill both momentum and morale. One should clearly stay away from endless approval chains, redundant manual work, lack of documentation and inconsistent workflows.

Bad processes often put teams in a state of constant firefighting due to unclear roles or ownership. 

Technology: The Tools Don’t Fail—How We Use Them Does

Technology isn’t a silver bullet—but it can be a loaded gun in the wrong hands. 

The most powerful technology, platforms or tools can’t save you from failures if the teams are not skilled enough to use it, the leaders aren’t aligned or where the culture resists change. 

Wrong Tool, Wrong Fit

Organisations often choose the wrong technology due to technology trends or due to vendor pressure. These can lead to technology limitations causing the projects to fail. Lack of framework due diligence integration testing and pilot rollouts could also increase the risks of the projects. The fallout usually happens due to compatibility issues, hidden costs, overengineering or underperformance from the vendor and lower user adoption. 

Test for fit, not just the features. 

Poor Implementation

Even the right tool implemented poorly can lead to unsatisfactory results. Lack of customizations or poor testing can lead to breakdowns, data loss and even make the project vulnerable to security threats. Poor implementation could cause further difficulties that hinder adoption.

Poor implementation could also mean overengineering. If the vendor team throws every feature in the mix, it usually bloats the systems and makes them hard to use. Cost of maintenance could also be an issue with poorly implemented projects. 

Building a Resilient Project Playbook

Building resilient projects usually starts with a shift in mindset. Here are some pointers to keep in mind while building your next playbook. 

Invest in the right people

Hire right, keep your team upskilling. Get an early buy-in and redirect objectively when the project seems to go astray. Encourage teamwork and open collaboration amongst team members. Newpage’s X-tend can help you find the right talent to build strong, future-ready teams.

Strengthen your process

Start by creating clear roles and responsibilities and a well defined leadership guideline. Be agile, test often and adjust quickly. Break down silos and promote collaboration. Implement robust risk management. 

Use Tech Intentionally

Don’t deploy tech for its own sake, your teams have to accept it. Start small, test and then scale. Choose a technology that can grow with your organisational goals. Choose your vendor wisely. Check if they have enough expertise, resources and knowledge of implementing projects in similar rational factors. 

Real-World Lessons from Failure

Forward thinking organisations recognise the failed projects not as setbacks but an opportunity to learn from their mistakes. These projects could be invaluable opportunities for learning, innovation and growth.

Conducting post-project analysis can help identify organisations the root cause of the failures and pinpoint areas of improvement. This approach fosters a culture of continuous learning and adaptability. Moreover, the lessons learned from failed projects can often be applied to other areas of the business, leading to unexpected innovations and breakthroughs.

Will You Learn—or Repeat the Past?

The cost of failure is high—but the cost of not learning from it is even higher.The price of failure is significant, but the cost of not learning from it is even greater.

Every project presents an opportunity to improve, but only if we are willing to look past the surface-level issues and address the root of the problem: our people, our processes, and how we implement technology. We hire great people from life sciences and healthtech—follow our careers page to see the latest opportunities.