Don’t Let IT Projects Empty Your Wallet

July 20th, 2015
Don’t Let IT Projects Empty Your Wallet

AGJ Systems & Networks

We hear it every week...a new prospect tells us how their old IT provider promised them the world, but ended up over-promising and under-delivering on their new project...

In fact, it happened just last week. We received a call from a local business that we talked to six months ago. When we last talked to this business, they were preparing for a new technology project and asked us to bid. They had several lower bidders, so we didn't get the job. When they called last week, they explained how the new network was running very slowly, they had antivirus issues, and they weren't happy with their copiers and printers. They were calling us to help them pick up the pieces.

On a similar note, McDonald’s, in 2002, decided to implement a system to provide their corporate executives with a bird’s-eye view of their 30,000 stores, to track, measure and monitor everything from profitability to cooking-oil quality. The project, named “Innovate,” was a massive five-year project with a billion-dollar budget. Two years into its implementation, McDonald’s executives abandoned the project and wrote off the $170 million invested, saying they needed to reduce capital expenditures.

Chances are, your business isn’t a McDonald’s with a billion-dollar IT budget, but chances are you’ve had at least one failed IT project that derailed, emptying your wallet and leaving you with nothing other than a grudge (like our first example above). And if you haven’t had that happen yet, chances are, as you grow, you will. So how do you avoid going down a rabbit hole of spending on an IT project? Here are five key strategies to keep you on track:

  1. Begin with the end in mind. The clearer you are on what “success” is for the project, the more likely you are to achieve it. Take the time to sit down with your executive team and decide exactly what the new system or network LOOKS like, how it performs, what it does and how it works.
  2. IT projects need to be driven by an executive who understands the business need and outcome, NOT the IT department. If you and your executive team aren’t going to be heavily involved with the process, decisions and management of the project, don’t start it.
  3. Think in smaller, “bite-sized” projects. One of the problems with the McDonald’s project was that it was so complex, affected multiple business systems and had such an enormous scope, it was almost guaranteed to fail. If you have a major system to build or overhaul, break it into smaller, manageable chunks so that problems are contained and costs controlled.
  4. Manage the project hours. Scope creep is the biggest challenge to keeping your project on time and on budget. If your project starts to take on a life of its own and goes over your budgeted time frame and your budget by more than 10%, it’s time to start re-evaluating what’s going on. Excessive overtime is a red flag that the project was not thought through properly, that you have the wrong team working on it, or that it’s being grossly mismanaged. Don’t ignore it.
  5. Missed milestones are a red flag. While it’s normal to miss a few milestones by a small margin, your IT team should not be allowed to consistently miss key milestones in the project. We recommend setting clearly defined milestones every two weeks or monthly versus monthly or quarterly. This allows you to keep a tighter control on the budget and deliverables.

BONUS: Don't pay for the whole project in advance. It's typical to pay up to 50% of the cost of hardware/software before the project starts. But DO NOT pay for the entire project before the work has begun. And remember to get references if you've never worked with the new IT company before.