Delays in projects cost contact centres dearly

it-185 A new survey has shown that technology project glitches have a dramatic impact on costs of contact centre projects.
The study, conducted by the Customer Experience Foundation (CEF) and sponsored by Empirix, paints a picture of an industry where project delays and budget overruns have become an accepted part of rolling out new IT solutions.

Built-in expectation of failure

Respondents acknowledged that between 25% and 33% of projects – such as installing or updating Interactive Voice Response (IVR) or Computer Telephony Integration (CTI) systems – get delayed.

This is likely to be a conservative estimate, as 57% of respondents (including project managers, technical and business stakeholders) stated that they expect almost by default that technology projects will go wrong.
The highest-risk projects were found to be in the areas of Automatic Call Distribution, Computer–Telephony Integration (CTI), databases (for CRM and call routing, for example), IVR and virtualisation. Many of the projects involved a mixture of these technologies, reflecting the general industry move to complex architectures.

Delays add 90% in costs – and more if ‘bad practice’ is at work

The study found that a typical contact centre IT project lasted just under a year. On average, technology delays added an extra 7.1 months in time and 90% on top of the original budget. For a typical £1million project this figure is equivalent to a total spend of £1.9million.

Compare this to the 10% ‘safety net’ IT project managers would traditionally build into their project plans.
For projects that had suffered the most serious delays and cost explosions, the most cited causes were

stakeholder issues
poor planning
a lack of focus from senior management
lack of resources
supplier issues
Upon further analysis, the common underlying cause of all of these was revealed to be lax project practice.

The companies concerned were prone to committing some classic mistakes when rolling out new technologies. These included no or little cost tracking, lack of thorough testing, no post-project reviews and a lack of senior executive project sponsorship. The study also identified ‘blame culture’ as a contributing factor, as exemplified by “round-robins”, elaborate escalation processes and a high attrition rate among project managers.

The impact of overruns was considerably less for companies that avoided these mistakes and applied best practice (see Figure 1). They still incurred 30% extra costs (that is, £300,000 for a £1 million project) and 3.6 months in extra time, on average.

Companies in the ‘bad practice’ category incurred delays and additional costs that were four times higher than for their best-practice counterparts: an extra 14.3 months and £1,150,000 for a typical £1 million project – more than double the original budget.
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Figure 1: Cost of delays for projects with an initial £1m budget

Customer experience – what customer experience?

More worryingly, companies seemed to be prepared – intentionally or otherwise – to put a high proportion of their customer dealings at risk while rolling out new technologies. Nearly one-third (29%) of respondents admitted that IT project delays had resulted in call failure rates of between 50% and 100%.
In spite of putting their business at stake, most respondents rated their projects’ success in delivering business benefits only as medium (39%). Only 23% said anticipated benefits had been exceeded, while 21% rated the benefits as poor and 4% said things had worsened.

Lack of Testing

Testing was found to be a widely underestimated element of good project practice. Only a fifth of respondents (20.7%) initially cited lack of testing as a cause of delays. In-depth interviews later showed that many other factors – like late supplier deliveries, system conflicts and network issues – could all be traced back to poor testing.
There was an inverse correlation between companies’ investment in testing and budget overruns. Contact centre operators who spent more on testing spent less on delays, reinforcing that a thorough testing strategy can help avoid some common project pitfalls (see Figure 2).
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Figure 2: The relationship between annual testing budget and cost of delay

Conclusion

To remain competitive in a difficult business environment and deliver a quality customer experience, companies need to focus on quality management throughout the deployment lifecycle.

The research highlights two key areas for contact centre operators to focus their efforts on. The first is investment; adequate project resources – both financial and managerial – need to be made available to ensure that good project practice can be applied. The second is corporate culture; organisations have to create mechanisms that help avoid playing the blame game and provide sustained executive support for contact centre IT projects.

7 Oct 2009

Filed under Call Centre News