IT Project Success Rate on the Rise
by Rhucha Kulkarni Mar 01, 2017
According to the Project Management Institute (PMI), the success rate of IT projects is on the rise, compared to years of stagnancy earlier. The 2016 Innotas Project and Portfolio Management Survey had showed that 55% of the survey respondents reported the experience of a project failure. This year, the PMI has resorted to a new approach, categorizing companies as “Champions” or as “Underperformers.” Results indicate that the failure rate has reduced to a mere 6% among Champions, and among Underdogs, this number stood at only 24%. This indicates a positive trend.
This altered approach of PMI as compared to Innotas is based on new metrics. Basically, a company that completes its projects in a timely manner, and in line with project goals 80% of the time, is considered as a Champion. On the other hand, an organization that sees on-time project completion fewer than 60% of the time is categorized as an Underperformer. The realization of benefits is high for Champions, and low for Underperformers. After this categorization, the success and failure rates were plotted. Champions were seen to have a 6% project failure rate, while for Underdogs it was 24%. Statistics for 2016 indicate that on an average, across all sectors, 14% of the projects are deemed as failures. Within the IT sector, the average for IT projects deemed failures in 2016 also stood at 14%.
A striking revelation was the cost consciousness that was a part of both Champions and Underdogs—all organizations reduced the average amount of money wasted on projects and programs by 20%, as compared to 2016. In 2016, this amount had stood at $97 million for every $1 billion invested in projects.
There seems to be a shift toward more mature project management methodologies. While costs, time, and resource efficiency are important, they are no longer the sole considerations.
Organizations are increasingly focusing on benefits maturity and realization, and the moot question being reiterated is whether the project delivers the promised business benefits. This attitudinal shift is a result of digitalization. With digitalization, the lines between business and IT have blurred and cross-functional functioning has enabled a greater big-picture outlook. As a result of this collaborative working style, project management offices (PMOs) are focusing more on planning and prioritization efforts, which is why the project success rate is shooting up. Also, most organizations are carefully picking where to invest, after thorough initial analysis, preferring to exert efforts on a few promising projects, rather than a host of unrelated projects.
People-wise too, there are positive changes. Organizations are realising the contribution of people skills in ensuring project success; 32% of the survey respondents expressed that both technical and leadership skills are a high priority—a number that had stood at 29% last year. We see a number of organizations giving importance to talent development, be it technical IT and project management skills, or softer skills such as conflict resolution, collaboration, strategy etc., which are imperative to project success.
Finally, the presence of a dedicated PMO goes a long way in assigning the field the focus that it deserves. According to the results, 50% of the organizations that have a PMO also have an enterprise project management office (EPMO). Statistically, companies that align their EPMO to the overall business strategy saw that 38% more projects met the intended goals. They also saw 33% less project failures. Many of these EPMOs and PMOs are turning to new-age project management technologies, such as agile to drive success.
The survey involved 3,234 project management professionals, 200 senior executives, and 510 project management directors.