Avoiding Black Swan Insurance IT Projects: Why Technology Implementations Fail
The “Black Swan” is the name often given to failed projects and generally indicates a major failure. Insurance companies are not immune to failed projects. In fact, this is an industry that consistently follows its competitors down technology paths that, more often than not, result in overbudgeted projects, impediments to speed-to-market outcomes, or significant shareholder value impacts.
Black Swan projects are completely avoidable but require greater evaluation concerning the business and financial impacts to the business. When faced with a decision on utilizing technology to solve a problem or to disrupt the market in their favor, executives should be identifying the technology roadmap in terms of short-term deliverables.
The “Follow the Leader (FTL)” crowd typically chooses what their competitors are doing – to be a “me too” in the market – spending tens of millions of dollars over multiple years. The FTL approach is almost certain the genesis for Black Swan projects.
You have to ask yourself … ‘what advantages could I have achieved with less costly projects and short-term deliverables in the years that were spent chasing the FTL competition?’
Legacy Systems of the Future
Black Swan projects become the legacy systems of the future. By the time the FTL projects are completed, it is time to replace them with more modern technology solutions that are actually available today with digital technologies.
Many companies face challenges including innovative thinking outside the four walls of the organization, dedicated business corporate sponsorship, spending, and IT management alignment. Too often, the IT community is interested in technology for technology’s sake.
Black Swan Awareness
Unfortunately, transformative projects run the highest risk of failure. Some interesting statistics by the numbers reported by the Harvard Business Review include:
- One in six projects have 200% or more cost overruns and time extensions by 70%.
- 67% of companies fail to terminate unsuccessful projects.
- 61% of the time, managers report conflicts with management goals and employee needs.
- 34% of projects are not aligned with corporate strategy.
- Approximately 33% of the time is wasted on redundant activities due to inadequate communications between the project teams.
To create white swan projects, executives need to identify the technology roadmap in terms of short-term deliverables to manage risks and costs. Learn more about this in Part 2 of this article, to be posted soon.
Learn how NIIT Technologies can help you avoid technology implementation failures. Successful project implementations are at the core of our insurance industry solutions.