Risk Management

3 Reasons Why Corporate IT Investments Fail

Investments excite positive feelings because they have the allure of potential riches. But investments have risks, and sometimes they will consequently fail. In an article for CMSWire, Oscar Berg shares some reasons why corporate IT investments fail and how to avoid this discouragement.

The Financial Folly

IT-related investments are slightly different than other investments because they are sunk costs. This makes it extremely pertinent that these investments quickly begin to create great business value. However, despite this reality there are investments that will still fail. When seeking to answer why, Berg explains there are three potential reasons that IT investments fail:

  1. Not taking the time to understand the “why”
  2. Not focusing enough on the user experience
  3. Too much blame on the individuals

One of the most detrimental mistakes an organization can make is blindly rushing into purchasing a new service without understanding why they even want it. The organizations should understand what they intend to do with the service first, and they should fully understand the consequences and risks associated with the investment. The “why” is sometimes difficult to fully understand, but without a solid foundation, the investment will be destined to fail.

The user and his or her experience is ultimately the organization’s livelihood, so the user experience should be a pivotal priority. Too often, corporate IT focuses too much on elements like saving money and not enough on the user’s experience.

Sometimes, more like oftentimes, the problem is not the individual. W. Edwards Deming created a rule to illustrate this: the 94/6 rule. This rule states that 94 percent of the time the problems are caused by the system, not the individual. Rather than blaming the employees for not reaching ROI, assume there is something wrong with the system–and fix it!

You can read the original article here: http://www.cmswire.com/social-business/3-reasons-why-corporate-it-investments-fail/

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