Why Do Companies Face The Same Tech Failures Again?

by CXOtoday News Desk    Dec 27, 2013

tech failure

Global businesses of all sizes face pervasive technology failures, with more than half registering a significant technology failure within the past year and 81 percent indicating they had the same fiasco occur multiple times, a Compuware Intellitrends survey has found.

The survey conducted on behalf of the technology performance company measured the frequency and severity of technology failures and the financial impact those failures have on the business.

Of the more than 300 global executives surveyed:

·         Forty-eight percent said they experience tech-performance issues daily.

·         Three of four reported that the frequency of failures is increasing or staying the same.

·         Fifty-one percent have recorded a major tech failure within the past 4-12 months.

·         Four of five (81%) indicated the same major tech failure has occurred multiple times.

·         Only one-third regularly collects data and quantifies the impact of failures.

Reasons for Failure

The survey by Intellitrends identified three primary reasons for the general lack of performance measurement and impact analysis:

1) Failure to grasp the root cause of performance issues and, consequently, a reduced ability to resolve them conclusively.

2) Failure to grasp the severity of the business impact of performance issues, leading often to an ineffective response through improper resource allocation.

3) Lack of alignment and inconsistent perceptions of severity and the time needed to resolve an IT issue, triggering friction between IT and the business.

The Long-term Fallout

Technology failures have negative effects on resources and time, as well as internal costs. The failures faced by the surveyed companies were primarily associated with lost productivity, decreased sales and revenue, and an inability to meet service level agreements. Outside costs were driven mostly by the need to set up temporary systems or manual processes to correct the failure.

When considering any type of technology failure, the average short-term financial impact of an isolated technology performance issue was $10.8 million.

In addition to the calculable and trackable short-term costs associated with technology performance failure, surveyed executives indicated substantial long-term impacts to the financial health of their companies. For instance, 45 percent of the respondents experienced a loss in market share or brand equity as the result of a technology performance issue.

Relying on Quick-fixes?

The survey also found that many IT performance issues are “fixed” with short-term patches. Most resolution attempts fall into these reactive categories:

·         Purchasing or upgrading software/hardware

·         Increasing IT training

·         Boosting IT staffing

·         Hiring an IT consulting

“The key to maximizing technology performance involves employing a proactive, or even predictive, performance-management approach that comprises focused expertise, comprehensive process and expert systems,” explained Gowda.

“In the absence of such a strategy, reactive measures like software patches, hardware upgrades and supplemented staffing are little more than Band-Aids. Over the long run, they prove to be extremely costly and largely ineffectual.”

Measuring the Losses

In another primary finding, the survey revealed that most organizations are unable to measure and quantify the business impact of their poorly performing technology.

“At a time when technology permeates the operational fabric of every business, technology performance becomes a key competitive differentiator,” says Compuware CEO Bob Paul. “Properly functioning technology can lead to expanded market shares, improved margins and increased revenues. Corporate leaders must understand the impact of technology on their businesses and take technology performance as seriously as they take other business-critical areas of their operations.”

“Employing a performance-management discipline where performance data gets collected regularly, measured and analyzed, is a good place to start. You need to be able to identify, measure, and understand performance issues before you can truly fix them,” added Bharath Gowda, Compuware’s director of Technology Performance Services.

Follow-up Action Required

Regardless of the area affected or type of failure, 90 percent of executives stated that additional investment in IT was required to resolve the issue. Among the most frequent actions taken were purchasing/upgrading new software or hardware, increasing IT staffing or hiring an external consulting firm. Despite efforts to resolve the issue, one in five companies felt it necessary to communicate the failure to their customers.