Internet- and Web-Based Software Projects (and Project Failures)
With the collapse of a significant number of e-commerce Internet- and Web-based companies in 2000 and 2001, there has been a general perception, often erroneous, that the failure of the companies can perhaps be blamed on the technology. This misperception is unjustified because, as growing evidence reveals, the failure of the companies was due more to the failure of the underlying business models on which the entire future and competitive strategies of the companies rested. Indeed, as Berghel (2001, 17) has argued, "The problem that caused the Y2K e-commerce meltdown is … an over-reliance on technology to overcome the weakness of a bad business model." Clearly, the often-irrational foundation on which the companies derived their wealth based on capitalization of their stock-market shares even when they were freguently operating in debt was not a failure of the technology. In fact, it was the promise and capabilities of the Internet- and Web-based technologies that tended to sustain what in a normal business environment would have been untenable business practices. The lure of the Internet and the Web, fueled by speculations in the financial markets, gave free reign to the rise of the companies' stock value until investors realized that the trend of ever-increasing share prices could not be sustained forever. For example, a company like Amazon.com had a share price of $427.12 at its peak market valuation on April 27, 1999, and three years later a share price of $13.96 on April 23, 2002 (<Yahoo.finance.com>), even though it had never turned a profit, because investors were led to believe that the revolutionary nature of the underlying Internet- and Web-based technologies was the wave of the future. And so despite evidence to the contrary, investors continued to invest heavily in the company's future. Amazon's operating business paradigm was widely replicated in other e-commerce companies; these eventually collapsed because the business models were not sustainable, notwithstanding the capabilities of the Internet- and Web-based technologies.The Internet- and Web-based technologies that formed the core of the companies' business strategies are therefore not the culprits in the failures of those companies. The flawed business models and the companies that staked their existence and survival on them produced the failures of the software development projects, which were intended to exploit the e-commerce phenomena. There is nothing innate in the Internet- and Web-based technologies that poses special problems for the software development process. For example, Internet- and Web-based software projects are invariably based on client-server architecture often implemented or deployed in a network environment. A number of the failed software project cases discussed in the book, including Confirm, FoxMeyer's Delta, DIA's BHS, and the Hershey Foods' ERP project, are all based on such an architectural framework. Hence we do not focus on Internet- and Web-based software projects in our discussion, because such an approach would not provide any additional insights into the causes or contributors to the failure of those projects beyond what is applicable to complex software development projects. In addition, as discussed in Ewusi-Mensah and Przasnyski 1991, 1994, some software projects may fail as a result of changes in the organization's structure or competitive business environment; these changes may require a reexamination of the basis for the continued funding of the projects in question. For instance, some projects may fail as a result of mergers and acquisitions; these may call for a reexamination of organizational priorities involving those projects, among others, and for a reassignment of organizational resources to satisfy different priorities. We can therefore surmise that some of the e-commerce software project failures can be classified as similar to the aforementioned types of projects with respect to their complexity, innovativeness, and dynamic development environments, among other factors.
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