Despite the ongoing terrible economic conditions, insurance carriers, particularly property/casualty companies, continue to invest vast amounts of money in the acquisition of new core insurance application systems and the subsequent replacement of aged and brittle legacy assets. We have discussed the nature of these systems and projects in previous “Shop Talk” columns, using such weighty phrases as “mission critical,” “enterprisewide,” “once in a generation,” “complex,” and “risk laden.” But weighty as they may be, none of these phrases reflects the single most important point about such projects, which is these projects fail more than they succeed. There are no good numbers by which to measure this statement, but several consulting firms have concluded more than half of these large, complex projects fail.

Measuring the frequency and severity (from partial implementation to total bust) of such failures is hard for several reasons–the single biggest of which is senior stakeholders are hardly going to advertise such outcomes given their embarrassing and career-threatening nature. Rather, we find the landscape littered with partial implementations that fit radically de-scoped completion criteria, ongoing rollouts that have been temporarily halted, “experiments” and proofs of concept that were interesting and the lessons of which are being absorbed, and the like. So, how do you ensure your mission-critical project doesn't end up on this euphemistic scrap heap, or if it is heading that way, how do you identify the fact early enough either to save the project or kill it for a lot less than would otherwise be the case?

Much has been written about how and why projects fail, and the post-hoc litany includes such “well knowns” as lack of management commitment, scope creep, changes of senior management, changes in business environment, etc. While these after-the-fact pointers may be true, they don't answer the most important question, which is, how do you stop a project from failing, or stated in the positive, how do you maximize the likelihood of its success? Given these projects are complex and lengthy, there is no simple answer, and there also is no single point-in-time action that can ensure a successful outcome. Some aspects of a project almost certainly will be better controlled or more adequately sourced than others; similarly, the momentum of the project will vary over time. At certain times, it will hit tough patches, lose focus, and slow down, and at other times, it will appear to move forward fairly smoothly and consistently. So, there are at least two dimensions to a possible answer: The first is, how do we identify and take stock of the key components of the project, and the second is, how often should such a stock taking be done?