The hidden cost of technology failures

 A new study has revealed the hidden costs of technology failures with 25 per cent of contact centre projects suffering cost overruns and delays, not helped by the chronic lack of testing.

The survey published by the researcher Customer Experience Foundation (CEF) in conjunction with Empirix, a specialist in service quality assurance for call centres. It was conducted among 100 of the UK’s major 1,000 contact centre operators who had experience with contact centre technology projects worth over £500,000 ($875,762).

It found that when a project overruns, it can add 90 per cent to the original budget and more than seven months of extra time, on average. For a typical $1.75 million project this translates to an average total spend of $3.32 million.

Survey respondents estimated that, on average, between a quarter and a third of technology projects – such as installing new Interactive Voice Response (IVR) or automatic call distribution (ACD) systems – get delayed.

And it seems that companies that employ best practices are rewarded for their efforts, with those using ‘best practice’ in their project management incurring considerably less additional cost (30 per cent), while companies with less rigorous project governance racked up four times more, more than doubling their original project costs.

Likewise, the importance of testing was highlighted as a critical but widely underestimated element of good project practice. The study revealed an inverse relationship between companies’ investment in contact centre testing and budget overruns when updating or rolling out new technologies.

And the study highlighted the damaging impact that technology delays can have, with a number being affected to a large extent. For example, with service failure rates of 50 per cent not uncommon, but none of the companies tracked these impacts stringently.

A quarter of projects, or one in four, fail in some way,” said Trevor Richer, contact centre marketing manager at Empirix. “The key reasons are often poor relationships with suppliers and stakeholders.”

“If you have the right people, with the right levels of support, they often do the right things in the project,” he told Techworld. “But adequate budget, testing, audits, senior sponsorship, and the right people with right tools, doesn’t take into account the (negative) culture of companies.”

“What was clear when conducting this survey was the expectation of frequent failure was epidemic,” said Professor Morris Pentel, founder and chairman of the CEF. “Where a company culture is bad, people are are often looking for someone to blame. Often they sack man in the middle (the project manager), but sacking a project manager should be the thing you do last. He is the one who understand all issues, and companies should look at the other issues that are cause delays and overuns.”

“We found that people that suffer long delays often have small, or no annual budget for testing,” said Professor Pentel. “Testing is an afterthought service rather than actual key element.”

“The impact of delays and overruns on the customer experience is very high,” said Richer “A third of people over 50 per cent of customer contact is affected. That is very large indeed. The impact is not just on cost and delays, but on the customers themselves, and it leaves them frustrated.”

“It is quite shocking the number of projects that fail and it is a terrible indictment,” he added. “But we can give them a view of the contact centre before it goes live. You would be surprised at some of the big names who have not thought about testing before they go live.”

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Jim Love, Chief Content Officer, IT World Canada

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