Averting disaster

‘Tis the season for taking stock on the year and what didn’t go well is often greater news than what did. So informationweek.com has a bead on the top 10 cloud fiascos of 2013, while cio.com lists the biggest IT disasters.

Also this week it was revealed that Avon has axed the global rollout of an SAP-based order management system. Avon could take a charge of up to $125M on the project that had been featured at SAP events as early as 2011, but apparently drove away the company’s sales agents in a Canadian pilot.

Just as the business gains have to be factored into the return on a successful implementation, so do the business costs need to be considered in a failed one. Back in the 1990s, a very large banking client from the UK stopped in on my firm’s advisory meeting after visiting with a vendor that had partnered with two big US banks for what was to be a massive, comprehensive, retail banking system.

Unfortunately the system was already a failure, but fortunately I had two US banking clients at our meeting whom I could steer him to for a more local perspective—one a CIO and the other a pair of systems development managers. Although the direct, quoted price tag for the system would have been $100 million, this head of systems development for the UK bank figured the total ultimate cost to the bank would have been $1 billion, and so he never tired of thanking me for ‘saving’ his bank $1 billion.

The top reported IT disasters of 2013 involved governments with direct costs of $1 billion or more. But organizations need to factor in the sometimes many-times-larger investment and opportunity costs of their failures. These failures can be rooted in selection or execution, but either way, all organizations can resolve to practice great care in averting IT disasters for 2014.