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| DELAYS IN ROLLING OUT NEW CONTACT CENTRE TECHNOLOGIES CAUSE PROJECT COSTS TO DOUBLE |
Ref: N/1896
Date: 10/22/2009
Contributor: PM Lifeline Editorial, PM Lifeline
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| Research finds that project overruns add 90 per cent in cost on average; bad project practice and lack of testing can quadruple additional project costs |
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When contact centre technology projects are delayed, the impact on costs and on business overall is dramatic and largely ignored by UK contact centres according to a new survey conducted by the Customer Experience Foundation (CEF).
The survey was commissioned by Empirix, the leading provider of service quality assurance solutions for contact centres and new IP communications. It shows that project delays when rolling out new technologies were found to typically add over seven months of additional project time and an extra 90 per cent on top of the original budget. The survey also revealed that poor project practice can as much as quadruple additional costs, as compared with contact centres that apply best practices in their management of technology roll-outs.
Testing was singled out as a critical but widely underestimated element of good project practice. The study revealed an inverse relationship between companies investment in contact centre testing and budget overruns when updating or rolling out new technologies. This finding suggests that establishing thorough testing procedures can help avoid delays and costs associated with technology failures.
Tracking project costs was another stumbling block. Over three-quarters of respondents confessed to either not tracking project costs or only tracking some. And while most believed that roll-out delays had a negative impact on customer interactions, none of the companies tracked exactly how the day-to-day running of their contact centres had been affected.
The research was conducted among business, technical and project management staff at more than 100 private sector companies who had experience with contact centre technology projects worth over £500,000.
Survey respondents estimated that, on average, between a quarter and a third of technology projects such as installing new Interactive Voice Response (IVR) or automatic call distribution (ACD) systems get delayed.
It is difficult to comprehend how these huge cost overruns and delays happen in at least 25% of these types of projects, commented Professor Morris Pentel, founder and chairman of the CEF. We believe this is the first time anyone has shown what a massive problem the industry has here. The study also makes it clear that the impact of delays is not only financial, but also affects the customer experience of the contact centre and the brand behind it.
Trevor Richer, contact centre marketing manager, Empirix said, It is clear that building testing into the project plan shows attention to detail and a type of organisational commitment that will minimise delays and budget overruns, and avoid the project descending into fire-fighting.
» Project overruns add 90% in cost on average
Overruns in delayed projects to refresh and update contact centre technology, introduce new services or build new contact centres lead to an average increase of 7.1 months in time and 90% in project costs.
For a typical £1million project this means the average total spend will be £1.9million. Most of the additional cost was due to having to use project resources for a longer period of time, involving senior management to resolve problems and hiring outside experts to diagnose and solve problems.
» Good project practice pays off
The survey identified some of the classic mistakes companies make when rolling out new technologies. These include a lack of thorough testing, project reviews and senior executive sponsorship of the projects in question.
The impact of overruns was considerably less for companies that avoided these errors and applied best practice in their project management. These companies still incurred 30% extra costs (£300,000 for a £1million project) and 3.6 months in extra time.
For companies that fell into the above traps, delays and additional costs were four times as high as for their best practice counterparts: that is, 14.3 months and £1,150,000 more than double the original budget.
» Hidden causes of delay
Stakeholder issues, poor planning, a lack of focus from senior management, lack of resources and supplier issues were the highest ranked reasons for delays. While only a fifth of respondents (20.7%) originally mentioned lack of testing, in-depth interviews subsequently revealed that testing was a much bigger issue.
Factors such as late supplier deliveries, system conflicts and network issues were all linked to a lack in testing capabilities. Poor testing also affected project plans and resources, because delays meant that resources were reassigned and unavailable when needed.
There was a clear inverse relationship between companies investment in contact centre testing and budget overruns. Companies who spent more on testing spent less on delays. Those companies with annual testing budgets of less than £50,000 faced the biggest overspend: 115% in extra cost and 124% in additional time. The lowest impact was felt by companies whose testing budgets were between £1 million and £3 million (30% extra cost; 31% additional time).
Most respondents agreed that technology project delays had affected their customer interactions to a large extent. Nearly one-third of respondents cited service failure rates of over 50%. At the same time, respondents were fully aware that delays could have a negative impact on sales opportunities, business reputation and customer experience, which were highlighted by nearly one-quarter of those surveyed. Nevertheless, none of the companies tracked these indirect business impacts stringently.
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