  Out-of-control information technology (IT) projects have ended the careers of
top managers, such as EADS CEO Noel Forgeard and Levi Strauss' CIO David
Bergen. Moreover, IT projects have brought down whole companies, like Kmart in
the US and Auto Windscreen in the UK. Software and other IT is now such an
integral part of most business processes and products that CEOs must know their
IT risks, which are typically substantial and overlooked. The analysis of a
sample of 1,471 IT projects showed that the average cost overrun was 27% - but
that figure masks a far more alarming 'fat tail' risk. Fully one in six of the
projects in the sample was a Black Swan, with a cost overrun of 200%, on
average, and a schedule overrun of almost 70%. This highlights the true pitfall
of IT change initiatives: It's not that they're particularly prone to high cost
overruns on average - it is that 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 risk in doing IT. In
conclusion, the article outlines ideas as to what can be done to avoid Black
Swans.
