Assignment: Why Software Fails

Assignment: Why Software Fails ORDER NOW FOR CUSTOMIZED AND ORIGINAL ESSAY PAPERS ON Assignment: Why Software Fails I’m studying and need help with a Statistics question to help me learn. Assignment: Why Software Fails Read the attached article. Based on it, name three reasons for IT project failure and discuss why these can possibly lead to project failure? Write your response in a Word document charette_2005.pdf . Federal Aviation AIR JAM: The U.S billion Administration spent $2.6 icair-traff trying to upgrade its to cancel the control system, only dlocke d skies project in 1994. Gri ay. are still with us tod We waste billions of dollars each year on entirely preventable mistakes Have you heard the one about the disappearing warehouse? One day, it vanished—not from physical view, but from the watchful eyes of a well-known retailer’s automated distribution system. A software glitch had somehow erased the warehouse’s existence, so that goods destined for the warehouse were rerouted elsewhere, while goods at the warehouse languished. Because the company was in financial trouble and had been shuttering other warehouses to save money, the employees at the “missing” warehouse kept quiet. For three years, nothing arrived or left. Employees were still getting their paychecks, however, because a different computer system handled the payroll. When the software glitch finally came to light, the merchandise in the warehouse was sold off, and upper management told employees to say nothing about the episode. 42 IEEE Spectrum | September 2005 | NA Authorized licensed use limited to: University of Washington Libraries. Downloaded on September 4, 2009 at 01:22 from IEEE Xplore. Restrictions apply. Assignment: Why Software Fails ODD ANDERSEN/AFP/GETTY IMAGES By Robert N. Charette MARKET CRAS After its new automated suppH: -chain management system failed ly last October, leav merchandise stuc ing k in company warehouses, Brit is h fo od re ta il Sainsbury’s had to er hire 3000 additional clerks to stock its shelve s. GRAHAM BARCLAY/BLOOMBERG NEWS/LANDOV This story has been floating around the information technology industry for 20-some years. It’s probably apocryphal, but for those of us in the business, it’s entirely plausible. Why? Because episodes like this happen all the time. Last October, for instance, the giant British food retailer J Sainsbury PLC had to write off its US $526 million investment in an automated supply-chain management system. It seems that merchandise was stuck in the company’s depots and warehouses and was not getting through to many of its stores. Sainsbury was forced to hire about 3000 additional clerks to stock its shelves manually [see photo, “Market Crash”]. This is only one of the latest in a long, dismal history of IT projects gone awry [see table, “Software Hall of Shame” for other notable fiascoes]. Most IT experts agree that such failures occur far more often than they should. What’s more, the failures are universally unprejudiced: they happen in every country; to large companies and small; in commercial, nonprofit, and governmental organizations; and without regard to status or reputation. The business and societal costs of these failures— in terms of wasted taxpayer and shareholder dollars as well as investments that can’t be made—are now well into the billions of dollars a year. The problem only gets worse as IT grows ubiquitous. This year, organizations and governments will spend an estimated $1 trillion on IT hardware, software, and services worldwide. Of the IT projects that are initiated, from 5 to 15 percent will be abandoned before or shortly after delivery as hopelessly inadequate. Many others will arrive late and over budget or require massive reworking. Assignment: Why Software Fails Few IT projects, in other words, truly succeed. The biggest tragedy is that software failure is for the most part predictable and avoidable. Unfortunately, most organizations don’t see preventing failure as an urgent matter, even though that view risks harming the organization and maybe even destroying it. Understanding why this attitude persists is not just an academic exercise; it has tremendous implications for business and society. SOFTWARE IS EVERYWHERE. It’s what lets us get cash from an ATM, make a phone call, and drive our cars. A typical cellphone now contains 2 million lines of software code; by 2010 it will likely have 10 times as September 2005 | IEEE Spectrum | NA 43 Authorized licensed use limited to: University of Washington Libraries. Downloaded on September 4, 2009 at 01:22 from IEEE Xplore. Restrictions apply. COMPANY YEAR OUTCOME (COSTS IN US $) 2005 Hudson Bay Co. [Canada] Problems with inventory system contribute to $33.3 million* loss. 2004-05 UK Inland Revenue Software errors contribute to $3.45 billion* tax-credit overpayment. 2004 Avis Europe PLC [UK] Enterprise resource planning (ERP) system canceled after $54.5 million† is spent. 2004 Ford Motor Co. Purchasing system abandoned after deployment costing approximately $400 million. 2004 J Sainsbury PLC [UK] Supply-chain management system abandoned after deployment costing $527 million.† 2004 Hewlett-Packard Co. Problems with ERP system contribute to $160 million loss. 2003–04 AT&T Wireless Customer relations management (CRM) upgrade problems lead to revenue loss of $100 million. 2002 McDonald’s Corp. The Innovate information-purchasing system canceled after $170 million is spent. 2002 Sydney Water Corp. [Australia] Billing system canceled after $33.2 million† is spent. 2002 CIGNA Corp. Problems with CRM system contribute to $445 million loss. 2001 Nike Inc. Assignment: Why Software Fails Problems with supply-chain management system contribute to $100 million loss. 2001 Kmart Corp. Supply-chain management system canceled after $130 million is spent. 2000 Washington, D.C. City payroll system abandoned after deployment costing $25 million. 1999 United Way Administrative processing system canceled after $12 million is spent. 1999 State of Mississippi Tax system canceled after $11.2 million is spent; state receives $185 million damages. 1999 Hershey Foods Corp. Problems with ERP system contribute to $151 million loss. 1998 Snap-on Inc. Problems with order-entry system contribute to revenue loss of $50 million. 1997 U.S. Internal Revenue Service Tax modernization effort canceled after $4 billion is spent. 1997 State of Washington Department of Motor Vehicle (DMV) system canceled after $40 million is spent. 1997 Oxford Health Plans Inc. Billing and claims system problems contribute to quarterly loss; stock plummets, leading to $3.4 billion loss in corporate value. 1996 Arianespace [France] Software specification and design errors cause $350 million Ariane 5 rocket to explode. 1996 FoxMeyer Drug Co. $40 million ERP system abandoned after deployment, forcing company into bankruptcy. 1995 Toronto Stock Exchange [Canada] Electronic trading system canceled after $25.5 million** is spent. 1994 U.S. Federal Aviation Administration Advanced Automation System canceled after $2.6 billion is spent. 1994 State of California DMV system canceled after $44 million is spent. 1994 Chemical Bank Software error causes a total of $15 million to be deducted from 100 000 customer accounts. 1993 London Stock Exchange [UK] Taurus stock settlement system canceled after $600 million** is spent. 1993 Allstate Insurance Co. Office automation system abandoned after deployment, costing $130 million. 1993 London Ambulance Service [UK] Dispatch system canceled in 1990 at $11.25 million**; second attemptAssignment: Why Software Fails abandoned after deployment, costing $15 million.** 1993 Greyhound Lines Inc. Bus reservation system crashes repeatedly upon introduction, contributing to revenue loss of $61 million. 1992 Budget Rent-A-Car, Hilton Hotels, Marriott International, and AMR [American Airlines] Travel reservation system canceled after $165 million is spent. Sources: Business Week, CEO Magazine, Computerworld, InfoWeek, Fortune, The New York Times, Time, and The Wall Street Journal * Converted to U.S. dollars using current exchange rates as of press time. † Converted to U.S. dollars using exchange rates for the year cited, according to the International Trade Administration, U.S. Department of Commerce. ** Converted to U.S. dollars using exchange rates for the year cited, according to the Statistical Abstract of the United States, 1996 . 44 IEEE Spectrum | September 2005 | NA Authorized licensed use limited to: University of Washington Libraries. Downloaded on September 4, 2009 at 01:22 from IEEE Xplore. Restrictions apply. many. General Motors Corp. estimates that by then its cars will each have 100 million lines of code. The average company spends about 4 to 5 percent of revenue on information technology, with those that are highly IT dependent—such as financial and telecomOxford Health Plans munications companies—spending more than 10 percent on it. In other words, IT is now one of the largest corporate expenses outside employee costs. Much of that money October 1997 announcement of New billing system goes into hardware and software upgrades, quarterly loss triggers stock cannot keep up with software license fees, and so forth, but a big price to drop from $68 to expanding business, chunk is for new software projects meant to create a better future for the organization and $26 in one day, wiping out resulting in uncollected its customers. $3.4 billion in corporate payments of $400 million Governments, too, are big consumers of value. Company later pays from patients and software. Assignment: Why Software Fails In 2003, the United Kingdom had investors $225 million to $650 million owed to more than 100 major government IT projsettle lawsuits. caregivers. ects under way that totaled $20.3 billion. In 2004, the U.S. government cataloged 1200 civilian IT projects costing more than $60 billion, plus another $16 billion for military software. the total abandonment of a project before or shortly after it is Any one of these projects can cost over $1 billion. To take two delivered, and if you accept a conservative failure rate of 5 percent, current examples, the computer modernization effort at the U.S. then billions of dollars are wasted each year on bad software. Department of Veterans Affairs is projected to run $3.5 billion, For example, in 2004, the U.S. government spent $60 billion while automating the health records of the UK’s National Health on software (not counting the embedded software in weapons sysService is likely to cost more than $14.3 billion for development tems); a 5 percent failure rate means $3 billion was probably wasted. and another $50.8 billion for deployment. However, after several decades as an IT consultant, I am convinced Such megasoftware projects, once rare, are now much more com- that the failure rate is 15 to 20 percent for projects that have mon, as smaller IT operations are joined into “systems of systems.” budgets of $10 million or more. Looking at the total investment in Air traffic control is a prime example, because it relies on connec- new software projects—both government and corporate—over the tions among dozens of networks that provide communications, last five years, I estimate that project failures have likely cost the weather, navigation, and other data. But the trick of integration has U.S. economy at least $25 billion and maybe as much as $75 billion. stymied many an IT developer, to the point where academic Of course, that $75 billion doesn’t reflect projects that exceed researchers increasingly believe that computer science itself may their budgets—which most projects do. Nor does it reflect projneed to be rethought in light of these massively complex systems. ects delivered late—which the majority are. Assignment: Why Software Fails It also fails to account for the opportunity costs of having to start over once a project WHEN A SOFTWARE PROJECT FAILS, it jeopardizes is abandoned or the costs of bug-ridden systems that have to be an organization’s prospects. If the failure is large enough, it can repeatedly reworked. steal the company’s entire future. In one stellar meltdown, a poorly Then, too, there’s the cost of litigation from irate customers implemented resource planning system led FoxMeyer Drug Co., suing suppliers for poorly implemented systems. When you add a $5 billion wholesale drug distribution company in Carrollton, up all these extra costs, the yearly tab for failed and troubled softTexas, to plummet into bankruptcy in 1996. ware conservatively runs somewhere from $60 billion to $70 billion IT failure in government can imperil national security, as the in the United States alone. For that money, you could launch the FBI’s Virtual Case File debacle has shown. The $170 million VCF space shuttle 100 times, build and deploy the entire 24-satellite system, a searchable database intended to allow agents to “con- Global Positioning System, and develop the Boeing 777 from nect the dots” and follow up on disparate pieces of intelligence, scratch—and still have a few billion left over. instead ended five months ago without any system’s being deployed [see “Who Killed the Virtual Case File?” in this issue]. WHY DO SOFTWARE PROJECTS FAIL SO OFTEN? IT failures can also stunt economic growth and quality of life. Among the most common factors: • Unrealistic or unarticulated project goals Back in 1981, the U.S. Federal Aviation Administration began look• Inaccurate estimates of needed resources ing into upgrading its antiquated air-traffic-control system, but • Badly defined system requirements the effort to build a replacement soon became riddled with prob• Poor reporting of the project’s status lems [see photo, “Air Jam”]. By 1994, when the agency finally gave • Unmanaged risks up on the project, the predicted cost had tripled, more than • Poor communication among customers, developers, and users $2.6 billion had been spent, and the expected delivery date had • Use of immature technology slipped by several years.Assignment: Why Software Fails Every airplane passenger who is delayed • Inability to handle the project’s complexity because of gridlocked skyways still feels this cancellation; the • Sloppy development practices cumulative economic impact of all those delays on just the U.S. • Poor project management airlines (never mind the passengers) approaches $50 billion. • Stakeholder politics Worldwide, it’s hard to say how many software projects fail or • Commercial pressures how much money is wasted as a result. If you define failure as Case Study # 1 COMPANY: FAILURE: LOSS: September 2005 | IEEE Spectrum | NA 45 Authorized licensed use limited to: University of Washington Libraries. Downloaded on September 4, 2009 at 01:22 from IEEE Xplore. Restrictions apply. Of course, IT projects rarely fail for just one or two reasons. The FBI’s VCF project suffered from many of the problems listed above. Most failures, in fact, can be traced to a combination of technical, project management, and business decisions. Each dimension interacts with the others in complicated ways that exacerbate project risks and problems and increase the likelihood of failure. Consider a simple software chore: a purchasing system that automates the ordering, billing, and shipping of parts, so that a salesperson can input a customer’s order, have it automatically checked against pricing and contract requirements, and arrange to have the parts and invoice sent to the customer from the warehouse. The requirements for the system specify four basic steps. First, there’s the sales process, which creates a bill of sale. That bill is then sent through a legal process, which reviews the contractual terms and conditions of the potential sale and approves them. Third in line is the provision process, which sends out the parts contracted for, followed by the finance process, which sends out an invoice. Let’s say that as the first process, for sales, is being written, the programmers treat every order as if it were placed in the company’s main location, even though the company has branches in several states and countries. That mistake, in turn, affects how tax is calculated, what kind of contract is issued, and so on. Assignment: Why Software Fails The sooner the omission is detected and corrected, the better. It’s kind of like knitting a sweater. If you spot a missed stitch right after you make it, you can simply unravel a bit of yarn and move on. But if you don’t catch the mistake until the end, you may need to unravel the whole sweater just to redo that one stitch. If the software coders don’t catch their omission until final system testing—or worse, until after the system has been rolled out—the costs incurred to correct the error will likely be many times greater than if they’d caught the mistake while they were still working on the initial sales process. And unlike a missed stitch in a sweater, this problem is much harder to pinpoint; the programmers will see only that errors are appearing, and these might have several causes. Even after the original error is corrected, they’ll need to change other calculations and documentation and then retest every step. In fact, studies have shown that software specialists spend about 40 to 50 percent of their time on avoidable rework rather than on what they call value-added work, which is basically work that’s done right the first time. Once a piece of software makes it into the field, the cost of fixing an error can be 100 times as high as it would have been during the development stage. If errors abound, then rework can start to swamp a project, like a dinghy in a storm. What’s worse, attempts to fix an error often introduce new ones. It’s like you’re bailing out that dinghy, but you’re also creating leaks. If too many errors are produced, the cost and time needed to complete the system become so great that going on doesn’t make sense. In the simplest terms, an IT project usually fails when the rework exceeds the value-added work that’s been budgeted for. This is what happened to Sydney Water Corp., the largest water provider in Australia, when it attempted to introduce an automated customer information and billing system in 2002 [see box, “Case Study #2”]. Assignment: Why Software Fails According to an investigation by the Australian Auditor General, among the factors that doomed the project were inadequate planning and specifications, which in turn led to numerous change requests and significant added costs and delays. Sydney Water aborted the project midway, after spending AU $61 million (US $33.2 million). All of which leads us to the obvious question: why do so many errors occur? 46 IEEE Spectrum | September 2005 | NA SOFTWARE PROJECT FAILURES have a lot in common with airplane crashes. Just as pilots never intend to crash, software developers don’t aim to fail. When a commercial plane crashes, investigators look at many factors, such as the weather, maintenance records, the pilot’s disposition and training, and cultural factors within the airline. Similarly, we need to look at the business environment, technical management, project management, and organizational culture to get to the roots of software failures. Chief among the business factors are competition and the need to cut costs. Increasingly, senior managers expect IT departments to do more with less and do it faster than before; they view software projects not as investments but as pure costs that must be controlled. Political exigencies can also wreak havoc on an IT project’s schedule, cost, and quality. When Denver International Airport attempted to roll out its automated baggage-handling system, state and local political leaders held the project to one unrealistic schedule after another. The failure to deliver the system on time delayed the 1995 opening of the airport (then the largest in the United States), which compounded the financial impact manyfold. Even after the system was completed, it never worked reliably: it chewed up baggage, and the carts used to shuttle luggage around frequently derailed. Eventually, United Airlines, the airport’s main tenant, sued the system contractor, and the episode became a testament to the dangers of political e … Get a 10 % discount on an order above $ 100 Use the following coupon code : NURSING10

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