CHAOS REPORT 2015 - The Standish Group
CHAOS REPORT 2015The CHAOS Report 2015 is a model for future CHAOS Reports. There have only been two previous CHAOS Reports, theoriginal in 1994 and the 21st edition of 2014. This new type of CHAOS Report focuses on presenting the data in differentforms with many charts. Most of the charts come from the new CHAOS database from the fiscal years 2011 to 2015. The CHAOSfiscal year starts March 1 and runs until the end of February. A few of the charts are from the new SURF database to highlightcertain information. The purpose of this report is to present the data in the purest form without much analysis and little thoughtleadership. Analysis and thought leadership are offered in the CHAOS Manifesto series of reports.Another major change is how we define success. We have multiple definitions, including our newest. We coded the new CHAOSdatabase with six individual attributes of success: OnTime, OnBudget, OnTarget, OnGoal, Value, and Satisfaction. Our Traditionaldefinition is OnTime, OnBudget, and OnTarget. This means the project was resolved within a reasonable estimated time, stayedwithin budget, and contained a good number of the estimated features and functions. Our new Modern definition is OnTime,OnBudget, with a satisfactory result. This means the project was resolved within a reasonable estimated time, stayed withinbudget, and delivered customer and user satisfaction regardless of the original scope. We have the flexibility to present theresults for one to six of these attributes in any YES40%NO44%The percentage of projects that wereOnTime from FY2011–2015 within thenew CHAOS database.The percentage of projects that wereOnBudget from FY2011–2015 within thenew CHAOS database.YES56%The percentage of projects that wereOnTarget from FY2011–2015 withinthe new CHAOS database.TRADITIONAL RESOLUTION FOR ALL he Traditional resolution of all software projects from FY2011–2015 within the new CHAOS database.*All data, unless otherwise noted, represents results from FY2011-2015. The total numberof software projects is 25,000-plus, with an average of 5,000 per yearly period.Copyright 2015 The Standish Group International, Inc.
Our Modern Resolution definition is OnTime, OnBudget, with a satisfactory result. This definitionencompasses both a success rate for the project management of a project and for the project itself.The Traditional Resolution of OnTime, OnBudget, and OnTarget clearly supports the goals of projectmanagement, but not the customer or user of the product or project. The reason we consider thisto be the best definition is that it combines the project management process and the end resultsof a project. We have seen many projects that meet the triple constraints of OnTime, OnBudget,and OnTarget, but the customer was not satisfied with the outcome. This is evident in the data, whichshows a 7% decrease in the success rate and a 7% increase in the challenged rate.In changing from the OnTarget constraint to satisfactory we avoid penalizing a project for having an evolving target, which allprojects have, even the very small ones. Customers have a clear opinion on the satisfaction level whether or not all the featuresand functions that they asked for in the beginning of the project are realized. In our research we found that both satisfactionand value are greater when the features and functions delivered are much less than originally specified and only meet obviousneeds. In other research we found that most features and functions of software are not used. These additional featuresincrease cost, risk, and quality but do not necessarily provide S62%NO44%The percentage of projects that wereOnGoal from FY2011–2015 within the newCHAOS database.The percentage of projects consideredvaluable from FY2011–2015 within the newCHAOS database.YES56%The percentage of projects consideredsatisfactory from FY2011–2015 within thenew CHAOS database.MODERN RESOLUTION FOR ALL he Modern Resolution (OnTime, OnBudget, with a satisfactory result) of all software projects from FY2011–2015 within the new CHAOSdatabase. Please note that for the rest of this report CHAOS Resolution will refer to the Modern Resolution definition not the TraditionalResolution definition.Copyright 2015 The Standish Group International, Inc.2
Project size has always been a major element in the CHAOS research. It was clear fromthe very beginning of the CHAOS research that size was the single most important factor inthe resolution of project outcome. On this page we show two tables: resolution of all softwareprojects by size; and size of the software projects by resolution. These tables clearly show theimpact of size on the results of Ontime, OnBudget, with a satisfactory result. It is also clear thatthe larger the project, the less valuable the return rate. In many cases larger projects never returnvalue to an organization. The faster the projects go into production the quicker the payback startsto accumulate.One of the major services of our Value Portfolio Optimization and Management Service is to break up large softwareprojects into multiple small projects, with early delivery for success, quicker return on value, and greater customer anduser satisfaction. We have found that mostsoftware projects only require a small teamPROJECT SIZE BY CHAOS RESOLUTIONfor a short duration in order to deliver valueto the organization; only in very rare casesSUCCESSFUL CHALLENGEDFAILEDTOTALdo projects need to be larger and longer.Most, if not all, large, complex, multi-yearprojects are unnecessary. This is especially6%51%43%100%Grandtrue for standard infrastructure software—such as middleware, databases, and system11%59%30%100%Largemanagement.VALUE FOR LARGE all61%32%7%100%n Very High Value 4%n High Value 14%n Average 23%n Low 16%n Very Low 43%The size of software projects by the Modern Resolution definition fromFY2011–2015 within the new CHAOS database.The return of value for large projects from FY2011–CHAOS RESOLUTION BY PROJECT SIZEto 2015 within the new CHAOS 6%11%100%100%100%VALUE FOR SMALL PROJECTSn Very High Value 17%n High Value 27%n Average 36%n Low 9%n Very Low 11%TOTALThe return of value for small projects from FY2011–2015 within the new CHAOS database.Copyright 2015 The Standish Group International, Inc.The resolution of all software projects by size from FY2011–2015 withinthe new CHAOS database.3
Looking at project resolution by industry provides another view of the CHAOS database. Thetable on this page shows the resolution of all software projects by industry from FY2011–2015within the new CHAOS database. The results show that retail projects had the highest success rateat 35% using the Modern definition of success. The results also show that government projects hadthe highest failure rate at 24%, and financial and government projects had the highest challengedrate at 56%. The comparison of satisfaction level for banking versus retail shows that retail also hasbetter results.Many of our Benchmark clients like to compare their results to other organizations in the same industryand we do this as matter of course. However, we found that industry is not the most accurate or important metric of comparison.The most accurate is to consider industry as a minor filter, with project type, size, skills, and methodology as primary filters.Other minor filters would include organizational size and geography. In our Resolution Benchmark Membership we use thistechnique to benchmark project portfolios.BANKING PROJECTSRETAIL PROJECTSn Very Satisfied 9%n Very Satisfied 12%n Satisfied 21%n Satisfied 27%n Somewhat Satisfied 28%n Somewhat Satisfied 32%n Not Satisfied 19%n Not Satisfied 18%n Disappointed 23%n Disappointed 11%The satisfaction level for banking projects from FY2011–2015The satisfaction level for retail projects from FY2011–2015within the new CHAOS database.within the new CHAOS database.CHAOS RESOLUTION BY s29%52%19%Telecom24%53%23%Other29%48%23%The resolution of all software projects by industry from FY2011–2015 within the new CHAOS database.Copyright 2015 The Standish Group International, Inc.4
In our CHAOS Report 2014 we showed that project resolution differed slightly by most of theareas of the world. In that report we used the traditional success metrics of OnTime, OnBudget,and OnTarget. In this report we used the Modern definition of success of Ontime, OnBudget, with asatisfactory result. We see a major bifurcation with North America and the rest of the world; NorthAmerica has a 31% success rate versus Europe at 25%, Asia at 22%, and the rest of world at 24%.We have seen that North America has some of the highest emotional maturity skills. These skillsinclude managing expectations and gaining consensus, which in turn would cause a high satisfactionlevel. On the other hand, Asia has the lowest emotional maturity scores according to our emotionalmaturity appraisals and benchmarks.As we reported in the Factors of Success 2015 report, emotional maturity is the second-ranked Factor of Success. In that reportwe stated that having a skilled emotional maturity environment helps 80% of projects enjoy success. The No. 1 Factor of Successis a skilled executive sponsor. These two factors, along with the other eight, are appraised as the first step in the ResolutionBenchmark. If we find during the skills appraisal that the executive sponsorships and/or emotional maturity skills are deficientthen we will provide advice on how to improve the score and help improve future Benchmark results. For more information on theFactors of Success, please see the Factors of Success 2015 report.BUDGET PROCESSPROJECT SELECTION PROCESSn Key executive sponsor sets then Only the boss/seniorbudget with project team 37%executive 27%n Users set the budget withn There is a formal processthe project team 7%to do it 50%n All stakeholders are involvedn Each sector defines itsown priorities 21%in the budget 31%n The CFO sets the limit on the budget 17%n It is very varied or I do not know 3%n Other 8%We asked the 37% of SURF respondents who said that the keyexecutive sponsor sets the budget with the project team, “Ingeneral, who participates in project selection/approval in yourorganization?” This is based on 111 responses in the SURFdatabase.We asked IT executives, “What is your general practice on projectbudgeting and cost collaboration?” This is based on 300 responsesin the SURF database.CHAOS RESOLUTION BY AREA OF THE WORLDSUCCESSFULCHALLENGEDFAILEDNorth America31%51%18%Europe25%56%19%Asia22%58%20%Rest of World24%55%21%The resolution of all software projects from FY2011–2015 by the four major areas of the world.Copyright 2015 The Standish Group International, Inc.5
The type of project has a major effect on resolution. The table on this page shows the resolutionof all software projects by project type from FY2011–2015 within the new CHAOS database usingthe Modern definition of success. Projects using a purchased application with no modificationhad the highest success rate at 57%. Projects that were developed from scratch using modernmethodologies had a 23% failure rate. This is the highest failure rate other than the “other”category. The results also show that projects that were developed from scratch using traditionallanguages and methods had the highest challenged rate at 61%.Modernization projects had the second highest success rate at 53%. The Standish Group has a veryspecific definition and development method for modernization projects. In fact, we modified “modernization” by adding “inplace” so as not to confuse the general modernization of applications by the other techniques such as developing from scratchusing modern methodologies or purchasing components. For more information on modernization in place, please see ourModernization in Place report.GAIN VERSUS RISK METRICSROI FOR REQUIREMENTSn Calculate overall project andn Painful 31%allocate over individualrequirements 15%n Restrained 68%n Calculate each requirementn Painless 1%and add up to overall projectROI 14%n Calculate overall project,calculate major requirements,and allocate the rest 30%n Do not calculate individual requirements 40%We asked IT executives, “How do you calculate ROI for individualrequirements?” This is based on 300 responses in the SURFdatabase.We asked the 40% of SURFrespondents who said they do notcalculate individual requirements,“How would you describe your organization’s efforts indeveloping and maintaining financial and risk metrics for projectrequirements?” This is based on 121 responses in the SURFdatabase.CHAOS RESOLUTION BY PROJECT TYPEPROJECT TYPESUCCESSFULCHALLENGEDFAILEDDeveloped from scratch usingtraditional languages and methods22%61%17%Developed from scratch using modernmethodologies23%54%23%Developed some components andpurchased others24%59%17%Purchased components and assembledthe application25%59%16%Purchased application and modified42%37%21%Purchased application and performedno %47%25%The resolution of all software projects by project type from FY2011–2015 within the new CHAOS database.Copyright 2015 The Standish Group International, Inc.6
The table on this page compares the resolution of all software projects from FY2011–2015within the new CHAOS database, segmented by the agile process and waterfall method. The totalnumber of software projects is more than 10,000. The results for all projects show that agileprojects have almost four times the success rate as waterfall projects, and waterfall projectshave three times the failure rate as agile projects. The results are also broken down by projectsize: large, medium, and small. The overall results clearly show that waterfall projects do notscale well, while agile projects scale much better. However, note that the smaller the project, thesmaller the difference is between the agile and the waterfall process.As we stated in the Factors of Success 2015 report, we have identified two trump cards that together create a winning hand.The trump cards are the agile process and small projects. As measured by Modern metrics, small projects using an agileprocess only have a 4% failure rate. For more information on trump cards, please see the Factors of Success 2015 report.TIME BOXESn Always 14%n Yes, most of the time 23%n Yes, some of the time 32%n No 31%We asked IT executives, “In general, do you utilize timeboxes to optimize your projects? This is based on 300responses in the SURF database.CHAOS RESOLUTION BY AGILE VERSUS WATERFALLSIZEAll SizeProjectsLarge SizeProjectsMedium SizeProjectsSmall Waterfall44%45%11%The resolution of all software projects from FY2011–2015 within the new CHAOS database, segmented by theagile process and waterfall method. The total number of software projects is over 10,000.Copyright 2015 The Standish Group International, Inc.7
We use two tables to determine and appraise complexity. There are five attributes ineach table. We then add up the points based on the attributes of the project to determine thecomplexity level. A complexity level is entered for each project in the CHAOS database. We alsouse the level in the Size-Complexity Matrix. Our Size-Complexity Matrix provides a guideline forcategorizing a project either by size or complexity.For more information about the Size-Complexity Matrix, please review prior CHAOS Manifestosincluding CHAOS Manifesto 2014. In addition, The Standish Group’s Portfolio Optimization andManagement Service can help develop strategies for reducing complexity and gaining success.Complexity is one of the main reasons for project failure. The table on this page shows the resolution of all software projectsby complexity from FY2011–2015 within the new CHAOS database using the Modern definition of success. The results showthat 38% of very easy projects were successful. Very complex projects have both the highest challenged (57%) and failure(28%) rates. Inside of every complex problem are simple solutions. Complexity is often caused by size, conflicting goals, largebudgets, and executive sponsor egos.LARGE, COMPLEX PROJECTSCOMPLEXITY APPRAISALn Yes, for all projects 6%n Successful 2%n Yes, for most projects 35%n Challenged 42%n Yes, for few projects 26%n Failed 56%n No 32%We asked IT executives,“Does your organization developany appraisal of complexity on its projects?” This is based on300 responses in the SURF database.The resolution of large andcomplex software projects fromFY2011–2015 within the new CHAOS database.CHAOS RESOLUTION BY COMPLEXITYSUCCESSFULCHALLENGEDFAILEDVery sy35%49%16%Very Easy38%47%15%The resolution of all software projects by complexity from FY2011–2015 within the new CHAOS database.Copyright 2015 The Standish Group International, Inc.8
The Standish Group has stated for many years that clear goals are achieved when all thestakeholders are focused on and understand the core values of the project. We believed that goalclarity and focus were essential to a successful project. However, measuring success by both theTraditional and Modern metrics we found the opposite to be true. We coded the database with a5-point scale, from precise to distant, in order to measure the effect on success rates. It is clearfrom the research that goals closer to the organization’s strategy have the opposite effect onhigher satisfaction and success rates.The Standish Group uses goal as one of the seven constraints as part of the Optimization Clinic. TheOptimization Clinic is the third step in our Value Portfolio Optimization and Management Service. We also use goal as one ofthe measurements for our Resolution Benchmark. The Standish Group is now suggesting that your organization take actionover trying to achieve clarity. Many of the most satisfying projects start out as vague. The business objectives are dynamic asthe project progresses. Project teams should reduce or give up control of the business objectives to encourage and promoteinnovation.COST/BENEFIT ANALYSISLOW-VALUE BUSINESS PROCESSESn Yes, we have/had an Yes, we have/had aconcentrated effort 23%concentrated effort 33%n Yes, but it isn Yes, but it isopportunistic 31%opportunistic 38%n No, but in our plan 18%n No, but in our plan 17%n No plans 28%n No plans 12%We asked IT executives: “Do you have an active programto optimize business processes by eliminating low-value businessprocesses?” This is based on 300 responses in the SURFdatabase.We asked IT executives, “Do you have an active program tooptimize business processes by doing cost/benefit analysis fornew business processes?” This is based on 300 responses in theSURF database.CHAOS RESOLUTION BY %8%The resolution of all software projects by goal from FY2011–2015 within the new CHAOS database.Copyright 2015 The Standish Group International, Inc.9
Successful projects need smart, trained people. Not surprisingly, one of the key projectsuccess factors identified in Standish Group’s CHAOS research is a competent staff. There arefive key fundamentals to ensure staff competency. First, identify the required competencies andalternativ
T he CHAOS Report 2015 is a model for future CHAOS Reports.There have only been two previous CHAOS Reports, the original in 1994 and the 21st edition of 2014. This new type of CHAOS Report focuses on presenting the data in different forms with many charts. Most of the charts come from the new CHAOS database from the scal years 2011 to 2015.
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