And what’s so often at the heart of these cluster-failures? A fundamental misunderstanding of the business process.
Today, we’re going to dig into the ubiquitous problem of failed digital projects, why they fail, and 7 strategies you can deploy to ensure your digital project succeeds.
Do Digital Projects Fail?
Somewhere between 70% and 90% of digital projects fail. Of course, this varies depending on what type of digital project you’re talking about and what you define as failure. For example, Couchbase found that 90% of projects failed to deliver as promised, failed to deliver beyond minor improvements, or completely flopped. That’s a wide failure range. Maybe some of those projects would prove successful in the long term or were only designed to make minor improvements.
On the flip side, CIO.com reported that 50% of companies aren’t successfully executing their digital strategies, and 20% believe that those very projects are a waste of time.
Let’s unpack that a little.
First, it means that 20% of projects fail before they’re out of the gate. If CIOs and executives don’t believe in the strategy, it’s unlikely the tactical execution will bring them around.
Second, half of the companies not successfully executing is interesting for a few reasons. It shows that there’s significant enthusiasm and recognition that yes, organizations need to change. But it also shows that they’re sure what to do, even with the resources and buy-in to start.
And it’s not just small, legacy-heavy businesses that fail at digital projects.
IBM, for instance, was sued by Pennsylvania in 2017 for$110 million after a failed digital project.
GE’s 2011 efforts to build an IoT platform failed to impress investors, and their profits tanked and the CEO left the company.
And according to the Harvard Business Review Lego, Burberry, Procter & Gamble, and Nike have all launched (and failed) digital projects.
So what happens? Why do smart companies fail at digital transformation, and how can you avoid these mistakes when it comes to your business?
Why Digital Projects Fail
The interesting thing about digital projects is that, despite the regularity of their failure, they tend to fail for simple reasons.
But here’s what we think the main problem is.
To digitally transform or run a successful digital project requires significant collaboration.
That’s difficult and means that simple reasons for failure tend to stack up like building blocks.
That said, there are a few significant threats beyond collaboration that should be watched closely.
1. Failing to account for business processes
As you might have guessed from the title of the post, the most significant barrier to digital projects succeeding is a failure to account for business processes.
The problem goes like this.
First, someone notices a problem/inefficiency in how a company is delivering its product/service to the customer. They uncover a digital solution that might help.
Then, they work to push that through, selling the project as the next step in customer-centricity.
… but the tool/solution, while it does effectively solve the problem for the customer, doesn’t reflect or work well with the existing business process. The staff ends up maintaining an insufferable tool that exists beyond their normal workflow, and the lacklustre internal support makes staff resentful and disengaged, further alienating an already-problematic tool.
After months of struggle and huge training, implementation, and service fees, the project is abandoned, written off due to “tough internal resistance.”
In reality, though, it wasn’t Luddites in the ranks who blew the project — it was a failure of planning teams to fully account for existing business processes.
Customer-centricity doesn’t mean ignoring internal / back-end requirements. It means approaching them from the perspective of the customer and solving them accordingly. That means taking time to understand the internal systems that will drive a positive customer experience, and making sure you map how your new digital project works within those processes.
2. Failing to secure all executive buy-in
Almost everyone looking at failed digital projects will conclude that failed C-suite buy-in is a critical problem.
The challenge that we see again and again is that some executives are bought in, e.g. a CIO, innovation officer, or CMO, but others remain either unconsulted or refuse to get on board.
Problems happen when the projects inevitably spill across departments and suddenly, those executives who didn’t support the vision at the start are asked to participate and sign off on some change to their domain.
A good example of this is marketing and operations.
Say the CMO and marketing team are tasked with improving digital experiences for a major clothing store. They decide that a dedicated app is going to be the way to go. They get the development team, third-party app builders, and the CEO all on board.
But the COO remains unconvinced. She knows that she’s the one who has to actually deliver this and doesn’t want a headache.
The project moves on regardless.
Then, the marketing and development team realize they need to hook purchases made through the app into the broader supply chain and fulfilment workflows — both of which are the strict purview of the COO, who is now asked to redesign their workflows and put their resources into a project they didn’t believe in six months ago.
Aside from the obvious opportunity for pettiness, this situation also asks executives to commit resources to projects they don’t endorse, which is a sure-fire way to get your budget cut just when you need it most.
There are two solutions. First, get the CEO to mandate that digital transformation is a priority, and then bring digital projects in under that umbrella. When it comes from the top, it’s easier to secure buy-in down the road.
Second, carefully map your project and identify every executive leader who it might touch. Then don’t start until you have consensus from those leaders. It’s painful, but a little extra work now might save the project down the line.
3. Investing in shiny objects, not customer value
Projects that fail are so often a result of investing in a cool gadget, but not investing in business or customer value.
For instance, say a CEO asks a digital project manager to deploy a CRM. The CEO just read an article that said CRMs are the future, and she wants one.
That is not a good digital project brief.
Because it didn’t start with a business requirement or customer need. While a CRM might be a good idea, it certainly isn’t a good idea just because the CEO says so.
And as the project consumes more resources, or runs long, or requires business process reform, suddenly there’s a hard question about ROI
Make sure that you plan all your digital projects, no matter how big or small. Make sure that at every level, it’s clear:
1. Why you’re doing the project
2. What business problem it solves
3. What customer need it solves.
The most successful projects will have all three. Most projects have (2) OR (3). Terrible projects only have (1), and it’s usually something like “our CEO read an article.”
4. Poor definition/expectations setting
It’s tempting to look for silver bullets when it comes to digital projects. Both sides want it: the digital sponsor wants to ensure they get buy-in, and the executive committee is constantly looking for the next big thing. They want to believe that every digital project is like putting in a cloud CRM in 1990.
But that’s not the reality of digital projects, and it creates two problems.
First, when you promise the world, scope creep is inevitable. Lines of what’s in and what’s out are fuzzy since your objective is so fantastically out of reach, which means more and more stuff gets included.
Second, expectations end up far too high, which means achieving them is next to impossible.
Control expectations. It feels counter-intuitive when you’re pitching, but limit your digital project to a clearly defined, single entity. Ensure that it’s clear from the start what’s excluded or included (pro tip: this is a lot easier when you’re anchored to a business problem/customer experience).
5. Poor vendor selection
Finally, we get to the most common problem we see when it comes to failed digital projects: poor vendor selection.
A vendor can make or break your project in lots of ways, beyond just their technical capability. If you’re a comparatively small client, your work might get deprioritized. On the flip side, if you’re the single biggest thing a vendor has going on, they might struggle to service your account effectively.
There’s also a nest of working challenges that need to be overcome, from what digital communication tools you use to how you keep projects on track.
Do your due diligence. Make sure you read reviews of your vendor, evaluate multiple options, and ask for references from similar companies or projects that they’ve worked on before. If you’re going the RFP route, get a professional to help you craft it, so you know the questions to ask. A little extra cash here can save your entire digital project.
Wrap Up & Digital Project Success Checklist
So what do we make of all this?
First, digital projects are inherently a risky proposition. A lot fail. It’s natural. Part of this is just the nature of innovation — you have to make a lot of rubbish to get something good.
And as technology becomes more closely entwined with every aspect of a business, digital projects require more planning, more collaboration, and more buy-in than ever before.
Beyond collaboration, there are a few specific risks worth looking out for when it comes to digital projects:
- Ignoring business processes
- Failing to secure complete executive buy-in
- Investing in sizzle instead of solving business objectives or improving customer experiences
- Poor project definition / expectation setting
- Bad vendor selection
It’s not all doom and gloom though. There are lots of things you can do to make your digital project go off without a hitch. Here’s our digital project success checklist.
7 things to drive digital project success
- Clearly articulate the business problem you’re solving.
- Set goals and link each goal back to the overarching challenge.
- Put money behind your project. Clearly determine what your ROI is going to be (in dollars) compared to cost, and when that ROI will be realized.
- Extend your timeframe for everything by 20-30%. People consistently underestimate how long work takes to complete. Avoid overages and stress by expanding your timelines.
- Map your business process, so you know the lay of the land.
- Include business process mappers (internal or external) on your project team.
- Overestimate how much your digital project will cost. Better to come in under-budget than run out of money halfway along.