Out-Law News 2 min. read

Breakdown in customer/supplier trust a major factor in IT project failures, says expert

A breakdown in relationship between IT customers and their suppliers is a major factor in IT project failures, an expert has said.

IT contracts specialist Clare Murray of Pinsent Masons, the law firm behind Out-Law.com, said "the secret to success of major business change programmes is good governance" and that 'good governance' extends to managing healthy relationships with suppliers.

"Businesses need a robust strategy backed by the board to deliver successful IT and business change projects," Murray said. "That strategy needs senior level endorsement and business buy-in. It should first involve an overall review of the existing operating model and an assessment of what is critical to the business and should be supported by or replicated with new technology in accordance with priorities set by senior management."

"Typically customers have sourced technology and services from one or two major suppliers, and relied heavily on them to support their transformation programmes. TGood governance over those arrangements is vital and, in practice, will mean that potential delays or issues that arise during projects are handled swiftly, that there is good, open engagement between customers and their suppliers and transparency over what actions are being taken and for what purpose," she said.

"Where there is not open, dynamic dialogue, customer/supplier relations can become fractured. Misunderstandings can arise because communications are not clear or the aims of projects are not sufficiently articulated. As relations deteriorate it can become increasingly difficult to get the project back on track. " Murray said.

"Open engagement requires customers to be honest with suppliers about the issues they are facing, such as pressures to cut costs, without being confrontational or placing unreasonable demands on their suppliers. Instead, open dialogue should afford suppliers an opportunity to suggest solutions that can help customers address the pressures they are facing," the expert said.

Murray was commenting after a report by IT consultancy Forrester identified weaknesses in the way banks manage major IT projects. Principal analyst at Forrester, Jost Hoppermann, said a lack of expertise within banks on how to successfully replace core systems that have been in place for years, according to a report by Computer World UK.

“Today’s banking platform transformations rarely fail because the technology is not up to the task,” Hoppermann said, according to the report. "They fail because the organisation that has to deliver the transformation initiative – typically over many years – isn’t mature enough.”

“Most banks only undertake major transformations every few decades – and so members of the previous transformation team are either working for different firms or have retired,” he said.

Murray said that it is important that in-house staff are actively involved in managing and delivering projects.

"Major transformation projects do need sufficiently skilled resources to be delivered successfully, and this may mean that organisations turn to external help to implement technological and business change," Murray said. "However, it is important that the lessons and benefits derived from delivering those projects are retained internally so that the business can tap into that banked knowledge to manage issues that arise after the technological and business process changes have been introduced. In the best case, this means that external resources are used to compliment in-house talent and not relied upon for a project's success."

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