Focusing on technology implementations and dispute risks

December 2016 | PROFESSIONAL INSIGHT | RISK MANAGEMENT

Financier Worldwide Magazine

Technology is everywhere, so how are technology implementations dealt with across different industries?

In the construction or transport sectors, for example, technology is not at the forefront; it is a necessity which must be dealt with as part of a larger project. This introduces additional levels of risk as the highest levels of project ownership may not pay sufficient attention to the most complex factors in an implementation. Alternatively, there may be a legitimate lack of understanding on the part of decision-makers who are too far removed from the realities of technology considerations.

Either of these situations places an increased burden on technology vendors which may or may not be reflected in the contract, but there are similar risks from the other side. Technology vendors are often not experts in the customer’s industry. This is the bedrock of many disputes, which are, essentially, a mismatch of expectations. When the project goes off track, the customer will depend on the vendor for guidance and the reverse might be true for the vendor.

Drawing a distinction is often more difficult than it first appears as the customer will typically be in charge of the overall direction of the project, but there will be contractual provisions which allow it to reasonably rely on the expertise of the vendor. These provisions are usually open to interpretation and thus are primed for potential disputes. There are additional levels of complexity introduced in larger projects which might require more than one vendor or sub-vendor, but the underlying point is ultimately the same – parties need to have a comprehensive understanding of what is wanted and what can realistically be achieved.

This is not easy when considering the wider structure of many of these projects. Corporate entities typically look to stakeholders, and shareholders in particular, and base decisions around what will keep them happy. It is arguably even more difficult for public entities which primarily look to constituencies which may not care about, or even be aware of, a given project. This unfortunate reality can disrupt an otherwise workable project which, ironically, can in the long run cause further frustrations and discontentment among shareholders and taxpayers.

Furthermore, there are difficulties associated with the fact that technology changes at a rate which far outstrips the vast majority of other industries. This, coupled with the fact that large projects often take several years to implement fully, followed by many years of maintenance, can cause problems simply by virtue of the need to keep up to date.

What happens, for example, when the ongoing implementation of an IT solution (something a customer may have to live with for more than a decade) is made obsolete by one of the millions of breakthroughs which surfaces every year? A marketing platform, for example, which could not reasonably deal with social media during the dawn of Facebook or Twitter? Such things cannot simply be ignored until a 10 year support agreement expires. To remain competitive, these things need to be worked into the solution. The complexity of implementing such changes will obviously vary from project to project, but the key point is that change is inevitable when technology is a factor, regardless of the primary industry. Many long term contracts make provisions for continuous improvement in an effort to recognise the rapid and ongoing changes in technology.

So, what can be done to mitigate the risks associated with technology in non-technology projects? The first thing is to accept that these problems are not anomalies; they are the norm in the technological aspects of projects. Often what happens in reality is that proposals to deal with them are dismissed as unnecessary costs which do not actually add anything to a properly planned implementation; this is simply not true in the vast majority of cases.

The issues are pervasive enough that they should be considered before signing off at the start of any project, and furthermore, protections should be viewed as necessary expenditures. Things like project change and the mismatch of expectations are not ‘potential issues’ in technology, they are inevitable costs. Ignoring this by treating these issues as ‘unnecessary expenditures’ is not only likely to cause delays in terms of projects going-live (which in itself could be a multi-million pound issue), but is also likely to increase general costs for the customer and reduce profits for the vendor – for example, when project rework is necessary as a result of mismatched expectations.

Protections can be as simple as building extra float (or ‘buffer time’) into a project to account for changes and misunderstandings, having a quick and robust process for dealing with disputes or scheduling ongoing meetings with the specific goal of keeping a project on track. When changes are made, these should follow the appropriate change process (for example, contract change notes if using a waterfall methodology and following the priority system for agile implementations), and the impacts of such changes should be properly assessed. Such precautions and actions can go a long way towards alleviating the issues associated with technology implementations, whether part of a larger project in a wider industry or not.

Failure to address the relentless march of technology can also result in the delivery of a solution that the users will simply not like. The speed of change in mobile app technology is a classic example and projects over the last five years or so that have not properly considered how users access business systems have run the serious risk of alienating users, particularly the younger generation who have come to expect that everything they need to use can be accessed from their mobile.

Tony Sykes is a partner, Chris Raske is a senior dispute consultant and Jason Coyne is a partner at IT Group. Mr Sykes can be contacted on +44 (0)845 226 0331 or by email: tony.sykes@itgroup-uk.com. Mr Raske can be contacted on +44 (0)845 226 0331 or by email: chris.raske@itgroup-uk.com. Mr Coyne can be contacted on +44 (0)845 226 0331 or by email: jcoyne@itgroup-uk.com.

Tony Sykes, Chris Raske and Jason Coyne

IT Group