Yes, technology is a powerful tool. However, it doesn’t always perform as expected. It often brings failures, resulting in financial losses. How can we avoid this?
In our previous blog on technology titled Path to business success: transforming technology into ROI, we highlighted certain strategies to improve ROI on technology investments and how applying them can lead to generating sustainable long-term value.
In this blog, we will explore the other side of the coin. We will delve into the reasons behind technology failures. Furthermore, we’ll discuss how a solid strategy can prevent problems and frustrations for managers and decision-makers in companies.
Technology failures in statistics
Technology is an extremely important tool, but its implementation is not always synonymous with success. It often fails and results in financial losses and missed opportunities. And this raises questions like: Why is the failure rate so significant? How could this rate be reduced? Why are projects executed with a lack of strategies, models, and processes? And surely many more.
Although the factors that determine the success of a project are multiple, it is good to clarify what “technology failures” refers to because it does not only mean that the project did not work.
According to CIOs, project leaders, and IT consultants interviewed in the United States, failure is related to the IT project not providing all the expected benefits. For example, it does not produce a return, or its execution was very late and became obsolete, or it was completed but the involved users reject it.
Now, understanding this scenario, let’s look at some figures related to the questions previously formulated. Renowned consulting firms such as Gartner and Capgemini, highlight in their reports that 75% of IT projects fail due to errors in the implementation phase. Forbes talks about 84%.
Based on the analysis of 50,000 projects worldwide, the Standish Group’s Annual CHAOS report concluded that 66% of technological projects presented partial or total failure. Figures that reveal an uncomfortable truth about the complexity and inherent challenges in managing technological projects.
According to figures from the Standish Group, an expert company in reports and studies on business and project management, 31% of computer projects in the U.S., due to a performance of only 53%, had to be completely halted.
In research, McKinsey concluded that 17% of large-scale IT projects threaten the very existence of the company. This finding underscores the need to approach IT projects with a holistic approach.
Why do IT projects continue to fail?
Understanding the reasons behind the failure of technological initiatives is essential to avoid financial losses, also to ensure that investments drive growth and efficiency, as it should be.
The reasons can be many, depending on each company, each project, and each situation. But below are details of some. The important thing is to ask yourself how many reasons apply to you, your company, or your team.
▷ Lack of alignment with business objectives:
One of the biggest mistakes is not properly aligning technology with business objectives. This can lead to technology investments that do not add real value to the business or do not address key issues facing the company.
It is essential for managers and decision-makers to understand how technology can contribute to achieving the company’s strategic objectives before investing in it. A strategy before anything else.
▷ Poor technology selection:
Another factor contributing to failures is inadequate technology selection. Often, companies choose solutions that are too complex for their existing infrastructure.
It is essential to conduct thorough research and evaluate available options before making a purchasing decision. Additionally, it is important to consider scalability and compatibility of technology with existing systems to avoid integration problems in the future.
▷ Lack of user training and adoption:
Even the best technology can fail if end users do not adopt it or do not use it correctly. Lack of proper training and ongoing support can hinder technology adoption within the company.
It is necessary to invest in training programs and provide resources to ensure that those involved understand how to use technology effectively and can make the most of its capabilities.
▷ Insufficient security and compliance:
Security breaches can expose the company to significant risks, including the loss of confidential data or disruption of business operations.
It is essential to implement robust security measures and comply with relevant standards and regulations to protect business information and ensure regulatory compliance.
▷ Resistance to change:
People may feel uncomfortable or threatened by the introduction of new technologies and may resist adopting them. Lack of proper training and communication about the benefits of new technology can exacerbate this problem.
It is important to involve employees from the beginning, provide them with the necessary support and training, and effectively communicate the benefits and objectives of the technology to overcome this resistance.
Strategic planning and communication as key to success
The importance of a well-defined strategy for technological success in businesses cannot be underestimated. A solid strategy is crucial to ensuring that every investment, implementation, and update not only aligns with overall business objectives but also meets the specific needs of the business and its customers.
Moreover, it helps anticipate and mitigate risks associated with the adoption of new technologies, facilitates better organizational change management, and ensures seamless integration with existing systems. In this regard, strategy becomes a critical element that enables companies to maximize innovation opportunities, staying competitive and relevant.
Our recommendation is to get it right from the start. Don’t execute without planning and don’t plan without prior research and/or analysis. Additionally, it’s essential to dedicate the necessary time and resources to develop and regularly review the strategy. This isn’t just a good practice; it’s imperative for long-term success and sustainability.
In conclusion
Technology is wonderful, but its successful implementation requires careful planning and a solid strategy. By addressing the reasons behind technological failures, companies can avoid costly mistakes and maximize the value of their technological investments.
At Interfaz, thanks to our over 20 years of experience in technology, we understand the challenges businesses face when implementing technology, and we are committed to offering innovative solutions as a competitive advantage. Learn more about us; together, we can build real solutions to these challenges and any others that arise along the way.
Resources: KPMG’s 2023 Technology Survey | Forbes | Capgemini | Standish Group, Chaos Report