Article Preview
TopIntroduction
In early 1993, the London Stock Exchange abandoned the development of its Taurus paperless share settlement system after more than 10 years of development. USD 134 million was wasted, and almost all of the 360 or so workers involved in the project were jobless. In addition, USD 670 million were used in other organizations preparing for the new system (Drummond, 1996b). Car rental company Avis Europe canceled in 2004 an Enterprise Resource Planning (ERP) system after spending USD 54.5 million (Best, 2004). Up until then, the ERP project was substantially delayed and as a consequence increased costs related to problem with design and implementation. In 2008, the airline carrier Qantas pulled the plug after spending USD 40 million on its Jetsmart parts management system (Krigsman, 2008). Challenges in this project started as early as 2004 when employees were alerted that the system would increase workload. Decision-makers continued the project nonetheless. As these examples and others (Drummond, 1996a, 1996c; Ewusi-Mensah, 2003; Mähring & Keil, 2008; Simon, 2009; Zahra, Hamdi, & Ali, 2014) illustrate, many IT projects go wildly over budget, drag on long past their originally scheduled completion date, and do not deliver according to initial specifications. For example, Miller, Dawson, Miller, and Bradley (2008) found that only 42% of the IT projects covered by their study were completed within 10% of initial schedule, cost and functionality and the Standish Group International (2009) state that in 2000 and 2008 28% and 32% of IT projects were executed according to plan. Software- and trade magazines regularly publish a list of the top-ten corporate IT failures (Barker, 2007; Nash, 2000).
According to Drummond and Hodgson (2011) escalation involves a continuing cycle of active reinvestment beyond economic rationality in response to negative feedback. Ross and Staw (1986) state that according to classical economic rational choice theory, one would expect decision-makers to pull the plug as negative consequences and feedback is received. However, this does not seem to happen in many cases. Ewusi-Mensah (2003) contends that despite best efforts and well planned software projects, as much as one third of projects may end up as failures (Wright & Capps III, 2010) and sometimes become “runaway projects” endangering the entire organization (Bharadwaj, Keil, & Mähring, 2009). “Runaway systems” are, like a runaway train, projects that are out of control, hard to stop, and in need of redirection or termination (Keil, Rai, Cheney Mann, & Zhang, 2003; Mähring & Keil, 2008). Indeed, escalation situations in IT projects can have severe consequences (Keil & Mähring, 2010). According to Ewusi-Mensah (2003) the cost of software projects that fail or are abandoned amounts to billions of dollars a year in the United States alone.