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The real cost of some IT messesThe July 26th issue of Crain's Chicago Business ran a page 1 story on several Chicago businesses that have suffered real financial losses at the hands of computer systems. W. W. Grainger saw a 15% drop in earnings and a resulting 12% drop in the stock price because of lost sales due to computer crashes and slowdowns that disrupted order taking. They lost sales of $10 million and the costs of the ERP system implementation were shooting up to $25 to $30 million over original estimates. Hartmarx wrote off $6.9 million and scrapped an IT systems overhaul. United Airlines lost an estimated $23 million because software that was supposed to help predict travel patterns, didn't. Waste Management, based in Houston, halted an SAP implementation after spending $45 million. The original estimate for the project was $250 million and they were looking at a $150 million overrun. There are some lessons to be gained from these catastrophes: 1. Bad technology purchases, or bad implementations, can truly hurt your company. They can cause frighteningly increased expenses and they can hurt in the worst place of all - sales and customer service. 2. Don't be afraid to pull the plug on a project if it's not going to work out. Measure progress against milestones every step of the way and, when it's getting out of control, press the eject button. 3. As is mentioned in the article, you need to get and maintain executive commitment to the project. It's not just a question of whether you can do it...you have to have the whole team on board. If the project is going to be long, grueling and expensive, you will need to worry about keeping people on board.
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