Troy, N.Y. - Although the Internal Revenue Service has significantly improved its internal processes since it implemented its first major information technology (IT) system in the 1960s, the agency has spent billions of dollars over the years on mainly unsuccessful IT initiatives. Mark Nelson, a Rensselaer management professor, recommends tips that can help such a huge organization streamline processes, increase efficiencies, potentially save billions of dollars, and prevent a cycle of multiple IT failures.

Each year, private corporations and government agencies in the U.S. spend billions of dollars implementing large-scale IT projects - only to see 50 to 70 percent of them fail, according to the National Research Council. In this context, "large-scale" is defined as a project lasting longer than six months and costing more than $10 million.

"Large-scale IT projects rarely fail only once," says Nelson. "The IRS in particular has been on an IT roller coaster ride in the past and followed a cycle of escalating budget, scope, and scheduling problems that have eventually lead to the termination of many projects before they reached their objectives."

Nelson recommends taking the following measures when beginning large-scale IT projects:

Open the lines of communication with and between project managers and the organization. Clear, consistent, and open communication is critical to the success of enterprise IT projects.

Implement feedback mechanisms that properly indicate troubled initiatives or over-spreading of resources. This includes encouraging employees to report troubles regularly, even if it means addressing - or troubleshooting - unforeseen issues.

Establish an environment where it is safe to make mistakes. Organizations will often increase their commitment to an unsuccessful course of action because the fear or penalty of failure is so great. Freedom to make mistakes enables organizational learning.

Set priorities and schedules for each of the parts of large-scale IT projects. Establish clear project phases and realistic goals that take into account overload issues that often threaten to derail large-scale IT projects.

Any changes to organizational structure or processes must be accompanied by new rules to support the changes. Otherwise individuals often revert to prior behaviors.

Nelson will present papers on his work at the International Resources Management Association meeting in May in Philadelphia. His research, "Re-escalation Cycles in Large-Scale Government Information Systems," and "Discovering the Causes of IT Failures in Government Agencies," were co-authored by undergraduate students Taylor Smith '03, an IT major, and Diana Thomas '03, a dual management and electronic media, arts, and communication major, respectively.

About Rensselaer's Lally School
Rensselaer's Lally School of Management and Technology was founded in 1963 as an integral part of Rensselaer Polytechnic Institute, the nation's oldest degree-granting technological university. Building on Rensselaer's heritage of more than 175 years of leadership in science and engineering, the Lally School is dedicated to advancing business through innovation. The Lally School's curriculum is designed to produce leaders who combine creative passion with the ability to integrate technology across business functions. The faculty emphasizes the value of hands-on experience available through campus resources such as the Severino Center for Technological Entrepreneurship and the nation's first on-campus business incubator. Rensselaer's Lally School offers graduate and undergraduate degree programs in management, doctoral programs in management and technology, an Executive MBA program, and a joint Sino-U.S. MBA for companies operating in China. For more information: www.lallyschool.rpi.edu.

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