The (f)ACTUAL Costs of a failed BI Project

We use BI as reportedly (according to Gartner) it has a higher propensity to failure. However, this rule applies to ERP, SAP, SAP HANA, global roll-outs, Big-Data, digitization or IoT projects. If you don't plan for success then you are planning for failure. This is deconstruction of the results of not having planned for success.

"Fewer than 30% of BI projects will actually meet business expectations" Gartner. The probability of your BI project failing is closer to 70% right now..

The above chart represents my 8 months at a major US enterprise in New York where their BI project followed Gartner’s predictions, i.e. failed miserably. My role was to ensure that their new partner was on-boarded professionally on a stable foundation for future success in a professionally structured manner. For the original article send me a note and I will send it to you. Here is the deconstruction of the above chart

BVA- Stands for Business Value Attainment in BI Projects. It is detailed in my book BI Valuenomics.

Background: ‘Plan your work and only then work your plan’. This company did not plan their work. The company had spent $4.3 million on their BI project. Users stopped using it 13 weeks after go live. CIO initiated an emergency project in which I was the solution architect for their future success.

Right Bar: The column on the right indicated what their cost would have been in the first 12 months after go live it they had planned, i.e. followed the BVA guidelines, i.e. $54,500

Left Bar: Includes what the customer spent in the first 6 months to simply get out of a failed project and on-board the new partner and their team. What we can term as handover. Here is the spend from bottom to top: Failure analysis cost- $49,000; Meetings costs- $72,000; Unplanned Project ramp-up costs- $245,000; Unplanned Reports delivery costs- $110,000; Terminating old partner costs - $75,000; On-Boarding and KT costs- $420,000; this is high level costs not including travel and incidental costs totaling to $1.1 million. Note 1: It is important to note that this is just to start on the new path and is not the cost of the total solution. This represents the cost of simply getting out of bad BI project and almost starting once again from Zero. Note 2: It took the company almost 18 months to deliver their reports from the new partner. Note 3: the company faced major issues with business continuity due to lack of critical reporting for all this period. Do not know if this was the prime of one of the reasons but in 2017 the company made enough mistakes to be primed for a takeover.

BACKGROUND FACTS:

1. Initial SAP BW Implementation cost = $1.8 million
2. Cost of realignment (6 months) = $1.1 million
3. Cost of replacement (16 months) = $5.6 million
4. total cost of fix = (1.1+ 5.6) = $6.7 million

Leveling the Field:

Fact 1: Digital Disruption is visibly impacting every industry, product and service globally. Some are more evident that others.

Fact 2: Informatics, i.e. BI, is at the center of all future digital enterprises. Your competitive positioning is directly proportional to the quality of your informatics.

Fact 3: [a] 70% of BI projects will not meet business expectations’ Gartner so if you plan to take great decisions ensure tht you appoint great architects and modelers with a track record for business excellence; [b] 98% of BI projects declare success in week 1 after go live, yes less that 30% remain successful by week 10’ BI Valuenomics. If your enterprise decisions are not better than those of your competition get ready to be disrupted or acquired.

Some companies follow the traditional technocratic approach to BI deployments, which often follows one of these three processes and concerns:-

1. iPM: too many customers embark on SAP initiatives without having a 'reliable internal PM'. Many of these companies pick someone that is available or hire an external PM who knows nothing about SAP. Both these decisions can lead to disastrous results. Still other companies ask their SI to be their internal PM and that once again is the wrong decision. In this project the company asked their SI to be their project PM and find an additional resource as their internal PM. Your PM needs to be a Business-expert and a SAP-expert and a PMO-expert having done a few of your type of projects prior to handling your project.
2. BI is often an afterthought in an ERP implementation. It thus remained unpanned till the very end, even though some of the BI resources were ramped up at the start of the ERP project (I have seen many such projects)
3.  BI is often deployed as a technical installation even though reports and decisions have nothing to do with technology. Business stakeholders are often kept out of project rooms, often at the insistence of the triad partner responsible (I have seen many such projects)
4. BI Project use lower cost resources often requiring a BI Developer, architect, modeler and analyst in a single resource. You will find plenty of resources that will do all this but noting in a structured and professional manner. Most BI project often measure success by cost, time and budgets. BI has no relationship to any of these metrics and thus tends to fall into a pattern of predictable failure.

In order to understand why the BVA methodology becomes mandatory, it becomes critical to understand the impact of erroneous decisions, by analyzing the cost of failure from an actually failed BI project.

As a foundation rule use the fundamental procurement advice ‘Look for the quality and not the price. That is Strategic quality and not value definitions without a BVA alignment.

Rule 1: ‘A Stitch in time saves Nine’. Something our grandma used to say and it is more true in BI implementations today as in most other areas. A detailed research by BI Valuenomics, spanning over 24 months with over 260 respondents clearly indicated that the cost of fixing BI defects after Go Live can cost anywhere from 4 to 60 times higher than if they are planned in a timely manner, i.e. during planning and design phases.

So what we did deep dive in our above BI project ‘Gone all Wrong’ and then reviewed the steps and processes involved in the decision to correct the defects.

Business background: Our global US enterprise implemented SAP BW with Vendor A. The business stakeholders Finance for example, requested for 62 critical ‘Must -Have’ reports and the Vendor delighted management with promise to deliver 426 Finance reports out-of-the-box. To cut the story short the BW Project delivered over 60 InfoCubes, over 12,000 reports across all business areas but business could only use less than 124 for their day-to-day operations in week two after go live. 11,886 reports were useless. Out of the 62 critical reports required by Finance only 2 could be used ‘As-Is’; 14 required major rebuild and the rest had to be built from scratch in a new project

BUSINESS STAKEHOLDER STATUS IN ABOVE PROJECT:

[1] The business stakeholders could not understand how the BI project had gone so wrong. Within 6 weeks business users started hounding IT stakeholders constantly for unmet needs forcing IT into ‘critical fire Fighting Mode’ meetings. By  7 weeks of ‘Go-Live’, users started asking IT if the company could sue the implementing partner, by week 12 they stopped using the new BI and demanded their old reports back. By week 14 the CIO had reached out to us to see if we could help them resolve their disaster. The key reason for the user dissatisfaction appearing only after week 4 is because that is how much time it took them to familiarize themselves with the deliverables, only because by this time they had been trained and no one could pull wool over their eyes any longer.

[2] After a period of time business and the CIO realized that getting the old team to do new tricks was not going to work, so they brought in a new Vendor B. As Vendor A knew that they were being eliminated they officially left only a skeleton staff to assist with the handover, but in most cases these remnants mostly simply stated ‘The person responsible for that task is no longer with the company’. In short, they did not assist in the handover process.

[3] All this did not happen overnight. There were meetings, tempers flared, internal and external stakeholders were fired or reassigned. Each of these components represented a cost. After 13 months the CIO and the client PM was replaced too.

[4] The official handover task lasted 120 days with double dipping for Vendor A and Vendor B resources.

Once Vendor A resources departed if was found that the fundamental design was so flawed that it might be cheaper to do a brand-new installation, rather than try to fix the existing ‘mess’. Unfortunately, in the fire-fighting all the great resources departed and mediocre one remained.

Below is a systematic breakdown of the basic cost of failure, and an estimate of what the company could have saved strategically if they had taken the ‘Meet Business Expectations in BI’ approach rather than the Technocratic one they took. 

CAVEATS

1. It must be remembered that this is a large company with an annual turnover in excess of $ 2.4 billion
2. They had spent $ 4.3 million in their initial BW Project with Vendor A. The project ran for 18 months with 14 resources to go live.
3. These are the initial costs of rectification for a period of 6 months. The problem continued and a new install was commenced after 13 months along with replacing their CIO and PM
4. These are representative costs exemplifying that the cost of failure rectification. Such costs need to be analyzed when selecting the initial partner, budgeting and having ‘BI Solution Architects with a BVA focus’ as part of the team emphasis. Such resources turn out to be assets in the long run and not expenses as some executives might see in the initial

Takeaway:

1. BI, and SAP HANA, are strategic business solutions and not another technical install.
2. You get what you plan for, if you don’t plan for business success then you are planning for its failure.
3. Make BI the center of your ERP initiatives and every enterprise project. Without information executives are driving blind.
4. The future will be dominated by companies that take better decisions in real-time, make sure your analytics and informatics are better than those of your competition.
5. Keep all BI projects business user and end user centric, technology is simply a catalyst and not the end game.
6. Plan for strategic customer expectations and not just a technical installation success.

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 ABOUT HARI GULERIA I VP SAP HANA Business Solutions I PrideVel

Supporting Analytics & Digitization design and decision excellence through operational, strategic solutions, advisory & board work.

 Hari has been designing IoT and digitization solutions before they became IoT and Digitization. In our new digitized world of information and decisions Hari is a globally renowned thought leader in the SAP analytics world, an author and a voracious publisher of blogs and white papers. He is best known for permanently living in the future, readers say his book is more relevant today than when it was written seven years ago, and partnering with actual end-users prior to designing solutions. His designs are consistently future compliant. Hari is an engaged, team oriented and actual-user benefit focused global solution leader and has been in successful startup phases across his many tenures and designated divisions, i.e. in IT, Analytics and building the next generation Digital Enterprise, a perfect fit both for mature global enterprise as well as start-up ideas and companies. He routinely assists startup companies align their go-to-market plans.

Hari is the author of ‘BI Valuenomics- The story of meeting business expectations in BI’ a book far more relevant today than it was in 2010 when it was published. He is currently working with Bill Inmon the father of Data Warehousing and TR Palle the Global Business Architect at Genentech/Roche to release a new book on ‘Analytics in the digital Era, and another book called ‘Digital Shock’ as an eye opener to the digital future and its impact on everyone of us.

With over 10 years of executive level business experience followed by over 20 years of IT consulting leadership experience Hari has been a Business focused technical expert helping companies meet, and often exceed, their business user expectations. He continues to assist Fortune 1,000 companies crystalize and articulate their decision systems and remodel them for the disruptive digital economy, Hari applies his business, consulting experience, and structured scientific skills to provide consistent leadership in deploying vision, strategy and long term-planning that assure high performance information delivery while enhancing competitive decision enablement.

Prior to this Hari worked at three leading IT services companies, first as the Director for SAP HANA Solutions at HP Enterprise Services for the Americas, before that at HCL Axon as the Director for HANA Analytics for North America, and prior to that with SAP America in their Value Realization/Engineering group. In all assignments Hari provided business focused design solutions for IT projects as the right-hand advisor to the IT project owners like the CFO’s and the CIO’s. Hari worked closely with the ‘C’ suite, Program directors, Project Team leaders, External Partners and customer business leads with clear dual focuses. The first being business benefits and the second was optimized TCO deliverables, i.e. “Highest Quality at Lowest Cost”. Hari may be contacted at [email protected]