Informational technology (IT) is among the most rapidly developing industries. At the same time, it is characterized by a high failure rate. A study by Baccarini, Salm, and Love explores the reasons behind poor performance and offers several suggestions based on its results.
According to the summary given in the article, the risk management process in the IT industry does not differ significantly from its iterations in other areas. Thus, such steps as establishing the context, identification, analysis, evaluation, treatment, monitoring, and communication apply to IT projects without the need for adjustment. The authors also identify 27 common risks in the IT industry by reviewing the existing literature and group them in seven categories: commercial and legal relationships, economic circumstances, human behavior, political circumstances, technology, and technical issues, management activities and controls, and individual activities (Baccarini, Salm, and Love 288).
To simplify further and generalize the findings, the authors suggest two broad categories for differentiating the processes and risks associated with the categories. The particularities of project organization such as the project’s scope, human resources management, quality control, budgeting, and timeframe are generally described as project management processes. These issues do not differ across the projects and thus require generic managerial knowledge and skill to operate.
The technical and technological details that depend on the project’s nature are defined as production processes. These usually require in-depth understanding and expertise from the management team and necessitate the involvement of technically proficient consultants to assist in managerial provisions. Notably, only one of the categories outlined above falls entirely into the latter group while the other six reside mostly within the project management domain.
The data obtained from structured interviews allowed the researchers to come up with an outline of project risks in the IT industry. First, according to the responses, 60 percent of risks in question have high consequences. This qualifies the IT segment as a high-risk environment.
Second, five of the most common risks were, in decreasing order, personnel shortfalls (insufficient number of employees leading to inability to complete a project), unreasonable schedule and budget (budgeting constraints or unrealistic time restrictions), unrealistic expectations (distorted perception of the expected result by the customer or other stakeholders), incomplete requirements (inability of the client thoroughly to describe the shape of a final product), and diminished window of opportunity caused by late delivery of software (the need to arrive at the market before the competitors, determined largely by tight time management) (Baccarini, Salm, and Love 290).
Of particular interest is the fact that two of the identified risks – personnel shortfalls and unreasonable budget and schedule – are confirmed in existing literature as the most common, while others are defined as unlikely. Specifically, the diminished window of opportunity is not considered a serious risk mostly due to the difference in dynamics of the IT market at the time of research. The responses also identified the preferred strategies of risk management, which could be boiled down to a single approach in approximately half of the possible risks.
The other half required more than one strategy and saw an unequal distribution of suggestions (Baccarini, Salm, and Love 293). Most importantly, the analysis revealed that in most cases, the risks, as well as the strategies, fall within the project management category, which means they can be mitigated using generic approaches.
The research outlines key weaknesses in risk management for the IT industry and offers valuable suggestions for improving the situation. The original findings should be approached with caution, considering the fluent and dynamic nature of the field and the outdated sources used by the authors. Nevertheless, with minor adjustments, the suggested approach can be utilized to minimize risks not only in the IT industry but also in the bordering fields.
Work Cited
Baccarini, David, Geoff Salm, and Peter Love. “Management of risks in information technology projects.” Industrial Management & Data Systems 104.4 (2004): 286-295. Print.