Electrification vs. Digitalization: A Comparison of Megatrends
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Chapter 1: Understanding Megatrends
In today's world, two significant megatrends are reshaping our environment: electrification and digitalization. While both trends manifest through countless projects globally, their delivery success rates differ markedly.
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Section 1.1: The Success of Electrification
Electrification, excluding nuclear and hydroelectric power, stands out with a strong track record of successful project completion, consistently delivered on time and within budget. In contrast, digitalization suffers from poor project management rather than inherent issues with digital technology itself.
Section 1.2: The Struggles of Digitalization
Digitalization, on the other hand, faces significant challenges, as evidenced by the frequent delays and budget overruns that plague IT projects. The average cost overrun for IT projects is a staggering 73%, with many projects exceeding their budgets by over 50%. This contrasts sharply with the relatively low cost overruns in electrification projects.
Chapter 2: Project Management Matters
The video "Global Megatrends" discusses how electrification is effectively transforming our world and the challenges digitalization faces. The insights reveal the importance of efficient project management in ensuring successful outcomes.
In "Vanguard | Megatrends: Will AI transform the way we live?", experts explore the implications of digitalization and its potential to reshape our future, emphasizing the need for improvement in project management practices.
To illustrate the disparity, solar power projects, for instance, have an average cost overrun of just 1%, making them the most predictable in terms of risk and delivery. Wind power projects follow, with a 13% average cost overrun, while energy transmission grids average 8%.
In stark contrast, IT projects exhibit an average cost overrun of 73%, with a significant portion seeing extreme budget blowouts. This pattern persists across various types of IT initiatives, whether they involve software, hardware, or management systems.
Section 2.1: The Elephant in the Room
The overwhelming evidence indicates that the primary issue with digitalization lies in project management rather than technology. Despite the frequent headlines regarding failed IT projects, discussions often focus on technological solutions instead of the necessary management improvements.
Section 2.2: Learning from Electrification
The successful strategies employed in electrification highlight the crucial role of high-quality project management. By focusing on effective management practices, we can potentially mitigate some of the adverse effects of the climate crisis, as discussed in my upcoming book, "How Big Things Get Done" (Penguin Random House, with Dan Gardner).
In summary, IT project managers could greatly benefit from the lessons learned in electrification. Without this knowledge transfer, the current inefficiencies in IT project delivery are unlikely to improve, resulting in ongoing underperformance in digitalization compared to the successes of electrification.