Gartner: Frequent project failure policies will increase company agility

Embracing increased project failure rates could be key to improving the efficiency of organisations, according to Gartner research.

The study claims that project and portfolio management (PPM) leaders that adopt a "fail-forward-fast" strategy, accepting project failure rates of 20-28 per cent as the norm, could make their organisations faster-thinking and more responsive, by encouraging experimentation and the determination of success or failure in the early stages of a project's existence.

"Current common practices in PPM simply don't meet the needs of the day," said Audrey Apfel, managing vice president at Gartner. "Continued cost pressures on most IT organisations will force IT and PPM leaders to rethink how they deal with increasing demands on an already overburdened workforce. Steady rates of project failure will lead PPM leaders and their peers and customers to accept a certain level of failure."

Because of market instability and the continual growth of IT, businesses will be obliged to take bigger and more frequent risks, continued Apfel, who believes that the 20-28 per cent failure rate will be the standard in 2016. This in turn will lead to an increased focus on cost management, which would limit the financial repercussions of unsuccessful projects.

"Organisations need to hunt for value in uncertain conditions. Risk is increased from external business and market factors that cannot all be mitigated, and therefore must be assumed and accepted in many projects that need to be undertaken," said Ms Apfel. "By having the courage to accept failure and move on — a fail-forward-fast mindset — you are more likely to minimise your losses, learn from your mistakes, and make the organisation more efficient, more quickly."

Traditionally, the improvement of PPM has centred around the advancement and optimisation of processes, which Gartner claims is around 80 per cent effective. When this tactic doesn't work, organisations face the prospect of shutting down a project late, and at great expense.

The adoption of the fail-forward-fast method means that organisations will have to improve project plans, which will signal the introduction of special mechanisms, such as early warning systems and frequent and unbiased reviews, continued Gartner.

"PPM leaders, in conjunction with the portfolio governance committee, must determine an acceptable percentage of exploratory projects that are subject to, or assumed to be subject to, fast failure in order to ensure that the real failure rate is less than or equal to the historical baseline of around 20 per cent," added Apfel. "We also recommend that portfolio managers develop and institute 'stop-loss' criteria to determine when to accept failure and bring a project to an end."

Overall, Gartner predicts that the fail-forward-fast approach will impact positively on PPM. Gartner is staging its PPM and IT Governance Summit 2013 in London on 3-4 June, where analysts will discuss fail-forward-fast and different methods of increasing company agility.

Another recently released Gartner survey has predicted that SaaS will will deliver over half of total CRM software revenue by 2016.