The Problem – An “Open Secret” Within IT
There is an “open secret” in the IT industry — a problem we all see but is seldom addressed. Billions of dollars are being thrown away each year due to ineffective software purchasing practices.
Over 300 billion dollars worth of enterprise software applications are bought each year1, and over 10% — more than $30 billion — is associated with products that end up being “shelfware.”2 In the U.S. alone, $12.3 billion is spent yearly on such wasted software3.
A contributing factor to software becoming shelfware is that companies at times buy licenses in bulk, some of which never get used. But a bigger issue is, companies find that software they’ve purchased isn’t actually a good fit for them because of functionality limitations, prohibitive customization and maintenance costs, or performance and scalability issues. And sometimes it just ends up being too complex for their IT operations and end-users to use.
But let’s put aside outright purchasing failures for now (because those only happen in other companies, right?) and instead look for a moment at one of the biggest budget-sucking challenges that IT faces: the high rate of under-performing software. Many times software projects are not complete failures, but nevertheless fail to deliver the targeted functionality, run way over budget, and seem to miss every implementation deadline.
Does this sound all too familiar? Unfortunately, it probably does. Independent studies have estimated that almost 70% of IT software projects are likely to fail4.
Surprisingly enough (or maybe not, to some of us), this excessive failure rate can often be traced back to poor requirements analysis5, caused by:
- Lack of proper stakeholder representation
- Lack of timely stakeholder input
- Poor team alignment
It all boils down to problems with communication and collaboration. And it hurts the bottom line.