Poor Leadership Causes Huge Losses On IS Projects
January 22, 2001
The majority of information systems (IS) development projects are well funded, consist of high quality software and hardware tools, and are critical for the success of the company. They are also subject to failures or substantial disappointments that, in many cases, waste billions of dollars.

Nearly one-third of all information systems projects are abandoned before completion, and of those that are completed, nearly two-thirds suffer serious problems such as late completion and cost overruns. Two researchers from Pennsylvania State University's Great Valley graduate school, located in Suburban Philadelphia, have found that project abandonment is often a result of poor leadership and communication among project team members, and between the project team and top management.

Management professors Effy Oz and John J. Sosik polled 159 IS professionals at 32 companies in the United States and Europe for a study titled, "Why Information Systems Projects Are Abandoned: A Leadership and Communication Theory and Exploration Study." The study was published in the fall 2000 issue of the Journal of Computer Information Systems.

All the respondents were high-ranking IS officers in their organizations with many years of experience in the area of IS development, who had experienced at least one project cancellation. The researchers developed a number of failure factors from articles written on the subject, and the IS professionals were asked to rate the degree to which each factor impacted the failed project(s).

The researchers' analysis led to the reduction of the factors to five major factors: lack of corporate leadership; poorly communicated goals/deliverables; team-related weaknesses; poor project management and deviation from timetable/budget. Of those factors, the first two were considered most relevant to IS project failures.

"IS development is proliferating more rapidly than what was anticipated even a few years ago. Today's requirements for success include instant access to information, greater knowledge sharing, and leadership that is shared among project team members," said Sosik. "This creates a new context for the type of leadership that is required for project success. Our study suggests that IS project team members must play a more proactive role in creating the dynamics that foster the successful development of IS projects."

The researchers invited the IS executives to add information for the study, some of which was disturbing. For example, one senior project manager commented: "After two years of development, we found out that management didn't know of the project. It was canceled." Some of the executives admitted that their companies had duplicated mistakes from previous failed projects.

"When something happens, it must be investigated. You must learn lessons from the investigation and reduce your mistakes," said Oz. "The purpose is to learn, set new standards, and follow the standards. I am not at all convinced that this is what happens with those who develop IS systems."

Press Contact: To interview the professors or obtain a copy of the study, please call
David Jwanier, manager of public information, at (610) 648-3276.