{"id":1434,"date":"2013-04-16T00:00:02","date_gmt":"2013-04-16T00:00:02","guid":{"rendered":"https:\/\/blog.planview.com\/?p=1434"},"modified":"2016-09-27T17:02:01","modified_gmt":"2016-09-27T22:02:01","slug":"black-swans-are-more-common-you-think","status":"publish","type":"post","link":"https:\/\/blog.planview.com\/black-swans-are-more-common-you-think\/","title":{"rendered":"Black Swans Are More Common Than You Think"},"content":{"rendered":"

The term \u201cBlack Swan\u201d was coined by University of Oxford, Sa\u00efd Business School professor Nassim Nicholas Taleb to describe high-impact events that are rare and unpredictable but in retrospect seem not so improbable. In the world of IT, black swan projects reap catastrophic effects and even result in a complete corporate meltdown. According to Taleb\u2019s colleagues, Bent Flyvbjerg and Alexander Budzier, \u201cIT projects are now so big, and they touch so many aspects of an organization, that they pose a singular new risk.\u201d\u00b9 Flyvbjerg and Budzier go on to state \u201cThe CEOs of companies undertaking significant IT projects should be acutely aware of the risks. It will be no surprise if a large, established company fails in the coming years because of an out-of-control IT project. In fact, the data suggest that one or more will.\u201d<\/p>\n

They reached this bleak conclusion after conducting the largest global study ever of IT change initiatives. The pair examined 1,471 projects, comparing their budgets and estimated performance benefits with the actual costs and results. The IT change initiatives ran the gamut from enterprise resource planning to management information and customer relationship management systems. Their study sample drew heavily on public agencies (92%) and U.S.-based projects (83%), but they found little difference between them and projects at the government agencies, private companies, and European organizations that made up the rest of their sample.<\/p>\n

When the University of Oxford team broke down the projects\u2019 cost overruns, what they found surprised them. The average overrun was 27% \u2014 but that figure masked a far more alarming one. Graphing the projects\u2019 budget overruns revealed a \u201cfat tail\u201d \u2014 a large number of gigantic overages. Fully one in six of the projects they studied was a black swan, with a cost overrun of 200%, on average, and a schedule overrun of almost 70%.<\/p>\n

Their findings highlighted the true pitfall of IT change initiatives: It\u2019s not that IT projects are particularly prone to high cost overruns on average, as management consultants and academic studies have previously suggested. It\u2019s that an unusually large proportion of IT projects incur massive overages \u2014 that is, there are a disproportionate number of Black Swans. By focusing on averages instead of the more damaging outliers, most managers and consultants have been missing the real problem.<\/p>\n

According to University of Oxford researchers, any company that is contemplating a large technology project should take a stress test designed to assess its readiness. Leaders should ask themselves two key questions as part of IT black swan management: First, is the company strong enough to absorb the hit if its biggest technology project goes over budget by 400% or more and if only 25% to 50% of the projected benefits are realized? Second, can the company take the hit if 15% of its medium-sized tech projects (not the ones that get all the executive attention but the secondary ones that are often overlooked) exceed cost estimates by 200%? Though these numbers may seem comfortably improbable, their research showed they occur with uncomfortable frequency.<\/p>\n

Even if a company passes the stress test, smart managers need to take other steps to avoid IT black swans. They should consider breaking big projects down into ones of limited size, complexity, and duration and make contingency plans to deal with unavoidable risks.<\/p>\n

That\u2019s where Enterprise Portfolio Management (EPM) comes in to help. By leveraging EPM techniques, CIOs can take a step back, see the bigger picture and truly understand how IT resources are spread across and utilized by the business. An EPM approach can help CIOs, CFOs and CEOs assess what they have in terms of Applications, Technologies, Information and Projects\/Investments. It can then connect these assets back to and support key business capabilities as well as corporate goals and strategies. An EPM effort can show decision-makers what Applications, Technologies, Information and Projects are needed, which are not, and how to safely retire the assets or cancel the projects that do not provide value to the business. This level of visibility equips enterprise leadership with the ability to make well-informed investment and divestment decisions and helps them avoid becoming another example of good IT intentions that turn into an infamous IT Black Swan.<\/p>\n

\"Complimentary<\/a>
Click here to get your complimentary Troux Mind Map<\/a><\/figcaption><\/figure>\n

\u00b9 Bent Flyvbjerg and Alexander Budzier, \u201cWhy Your IT Project May Be Riskier Than You Think\u201d, Harvard Business Review. Vol. 89 (2011), No. 9, pp. 23-25.<\/em><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"

The term \u201cBlack Swan\u201d was coined by University of Oxford, Sa\u00efd Business School professor Nassim Nicholas Taleb to describe high-impact events that are rare and unpredictable but in retrospect seem not so improbable. In the world of IT, black swan projects reap catastrophic effects and even result in a complete corporate meltdown. According to Taleb\u2019s…<\/p>\n","protected":false},"author":59,"featured_media":1436,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","footnotes":""},"categories":[435],"tags":[],"class_list":["post-1434","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-enterprise-architecture"],"acf":[],"yoast_head":"\nBlack Swan Projects - Blog | Planview<\/title>\n<meta name=\"description\" content=\"Learn how, in the world of IT, black swan projects reap catastrophic effects and even result in a complete corporate meltdown.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/blog.planview.com\/black-swans-are-more-common-you-think\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Black Swans Are More Common Than You Think\" \/>\n<meta property=\"og:description\" content=\"Learn how, in the world of IT, black swan projects reap catastrophic effects and even result in a complete corporate meltdown.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/blog.planview.com\/black-swans-are-more-common-you-think\/\" \/>\n<meta property=\"og:site_name\" content=\"Planview Blog\" \/>\n<meta property=\"article:publisher\" content=\"http:\/\/www.facebook.com\/pages\/Planview-Inc\/89422974772\" \/>\n<meta property=\"article:published_time\" content=\"2013-04-16T00:00:02+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2016-09-27T22:02:01+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/blog.planview.com\/wp-content\/uploads\/2016\/02\/black-swans-are-more-common-than-you-think-750x400.png\" \/>\n\t<meta property=\"og:image:width\" content=\"750\" \/>\n\t<meta property=\"og:image:height\" content=\"400\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Troux by Planview\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@Planview\" \/>\n<meta name=\"twitter:site\" content=\"@Planview\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Troux by Planview\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/blog.planview.com\/black-swans-are-more-common-you-think\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/blog.planview.com\/black-swans-are-more-common-you-think\/\"},\"author\":{\"name\":\"Troux by Planview\",\"@id\":\"https:\/\/blog.planview.com\/#\/schema\/person\/16cab2f3a574f40bde41e5ecd393383a\"},\"headline\":\"Black Swans Are More Common Than You Think\",\"datePublished\":\"2013-04-16T00:00:02+00:00\",\"dateModified\":\"2016-09-27T22:02:01+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/blog.planview.com\/black-swans-are-more-common-you-think\/\"},\"wordCount\":732,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/blog.planview.com\/#organization\"},\"image\":{\"@id\":\"https:\/\/blog.planview.com\/black-swans-are-more-common-you-think\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/blog.planview.com\/wp-content\/uploads\/2016\/02\/black-swans-are-more-common-than-you-think-750x400.png\",\"articleSection\":[\"Enterprise Architecture\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/blog.planview.com\/black-swans-are-more-common-you-think\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/blog.planview.com\/black-swans-are-more-common-you-think\/\",\"url\":\"https:\/\/blog.planview.com\/black-swans-are-more-common-you-think\/\",\"name\":\"Black Swan Projects - 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