What is the true cost of mismanaged digital projects?

The true cost of mismanaged digital transformation project goes beyond employee resignation and higher IT spending, says Richard Parcia, a global IT leader, at the CIO Conference in Manila.

By Adrian M. Reodique
May 31, 2017

Richard Parcia
Richard Parcia

Mismanagement of digital transformation (DX) project may result in employee resignation, increasing the risk for the business, higher IT spending, and failure to fully realise the benefits of a digital tool, said Richard Parcia, a global IT leader, at the CIO Conference in Manila last Thursday (25 May 2017).

Parcia highlighted the importance of employees in DX, particularly in normalising and sustaining the digital projects.

"When you lose people because of transformation, you practically lose the competency you might need to normalise and sustain your goal. The amount of resources required to rebuild what you've lost in competency will end up negating the returns of your transformation, but you'll only figure this out afterwards," he said.

Without skillful workers to sustain the project, Parcia said organisations will end up doing a mini DX project that has no ending. "Transformations give anxiety to people. When people are anxious, they stop being productive, [and] not be the knowledge workers you want them to be. [And when] they stop being innovative, they'll leave the company."

Besides losing people, mismanagement of digital projects, specifically misanalysis of risks, may put the company in an unexpected situation. Parcia cited, for example, some countries may fine companies that put data in the cloud without following their data sovereignty law.

In addition, making impulsive decisions to adopt technology or conduct a digital project may not only result in higher IT spending, but also failure to fully realise the benefits of the tool.

Parcia mentioned an example of his former company that invested in a full suite of enterprise resource planning (ERP) solution, but was not able to maximise its benefits as it was not installed correctly. "The true cost of transformation wasn't the cost of ERP at all; the true cost of that transformation is the missed opportunity to have something of value, which every IT executive want to present to the boss at the end of the day." 

In a nutshell, Parcia reminded IT leaders to ask themselves "if the benefits [of the project] outweigh the costs" before embarking on them.

He added: "The true cost of transformation actually goes beyond the transformation itself. It happens when [organisations] about to sustain it." 

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