This is why so many digital projects fail

Many projects stumble already in the initial phase. Should we have a variable price? The supplier gets paid more for working more hours. It can be convenient for one party, but often leads to the budget being blown. Perhaps a fixed price is better, with a clear specification and a sharp deadline? But how do you then handle new insights that lead to changes along the way?

Jonas Rendahl is co-founder and COO of Bombayworks, the digital growth agency that focuses on helping large companies with digitalization projects from start (strategy) to finish (design, web development and optimization).

He believes that both of the above-mentioned working methods risk creating failed digital projects.

– IT projects are complex organisms, he says. It's not like tiling a bathroom. Unfortunately, many people seem to think that you can set a fixed price in that way, but then you risk building away creativity even before the project has started.

Don't chase waterfalls

At Bombayworks, they have chosen a third way: to work agilely, in a variant of the Scrum methodology. The fixed part of this working method is the existing budget and the intended deadline. But exactly where you land depends on how well the client and the contractor can cooperate under the given premises.

– It immediately makes a difference in attitude. Both we and the product owner want the project to succeed, and we make joint efforts to get as far as possible within the given framework.

The lack of a cemented scope means that new insights and adjustments are embraced during the project. However, the flexibility also creates some uncertainty, as you do not know in advance what you will ultimately get for your budget.

– The challenge in IT projects is that you have to be allowed to be creative and flexible while managing risk and uncertainty in a good way. We solve this by guaranteeing basic functionality in an MVP (Minimum Viable Product).

At Bombayworks, all functionality is prioritized according to which are 1. "must haves", 2. "should haves" and 3. "could haves". When all the ones are fulfilled, you can move on to twos and threes - if time and budget allow.

Jonas Rendahl returns to the construction metaphors again:

– If you are going to build a house, you know what budget you have and roughly what you expect. You definitely expect four walls and a roof, maybe 3 bedrooms, 2 bathrooms and a kitchen. But it's idiotic to start building a marble bathtub before you know if the insulation or the roof works as it should.

The art of exceeding expectations

Mats Johansson is Chief Growth Officer (CGO) at Bombayworks and responsible for the company's sales and marketing activities. He admits that a major challenge is to manage expectations already in the initial dialogue and that this places high demands on the people who sell digital projects.

– It is very clear: those who are most successful in managing expectations are those who have previously worked with delivery themselves and have an understanding of digital projects and the processes and challenges that occur in them.

Mats sees no immediate common denominator for the customers who are more successful than others in understanding and applying the agile working method. The most important thing is that there is a common attitude that the project should succeed within the existing framework and that it is a journey you make together over time.

– We work very closely with the client, more as a colleague than a supplier, because we are going to deliver value and growth together. Through close dialogue, joint priorities and continuous monitoring of time and budget, we increase the likelihood of success.

Mats points out that short-term digital initiatives often provide short-term growth. However, achieving long-term growth through digitalization requires a longer coherent period with jointly set goals and good conditions for exceeding them. Mats also points out that there is always an unspoken carrot in delivering under budget and exceeding expectations.

– If we have time left over, we can work on other things - or we're done for a cheaper price. It's about building long-term trust, by continuously managing expectations and delivering above expectations, which makes the customer come back to us for an even broader engagement in the future. With this way of working, everyone wins.

Publication: Breakit, October 2020