Critical Vendor-Related Failure Factors in Outsourced ICT Projects: Insights from the Malaysian Public Sector

Abstract

ICT projects in the Malaysian public sector continue to experience failure, especially in outsourced application system projects. In striving to overcome this issue, the government is leading a significant push toward the digitization of public services. In previous studies, the challenges of ICT implementation have been analyzed from the perspective of project, system, and technology management. However, the focus in these studies is typically on challenges that occur within the system. There is limited concern for the outsourcing of public services. Specifically, this study focuses on the critical factors of vendor-related failure in ICT projects in the Malaysian public sector. The study employed an interview-based approach in which eight experienced ICT practitioners involved in project implementation, procurement, governance, and vendor management participated in purposefully selected, semi-structured interviews. Data were analyzed by thematic coding of interview transcripts. Each percentage reported represents the frequency of the reference within its own HOPT-FIT domain rather than a total share across all four domains. The findings were that vendor ineffectiveness, lack of project management, problems with requirements and risk management, as well as issues of knowledge transfer and effective governance, technology, and project management were the dominant factors contributing to ICT project failure. The research further confirmed that ICT project failure is multifaceted and occurs due to the integration of challenges in the human, organizational, process, and technology domains throughout the project lifecycle. deficiencies in technology, as opposed to upstream weaknesses in human capability and process governance. This demonstrates the study's finding that human and process-related capabilities are the dominant factors contributing to the failure of outsourced ICT projects, with Technology (the biggest of these factors, technical difficulties, 75%) recording the highest percentage in a single domain. Through this study, providing the first empirical evidence on the failure of ICT projects due to vendors, I offer contributions to the body of knowledge in information systems and provide practical advice for improving the procurement of goods and services and the assessment of vendors. The results lay the foundation for the development of a vendor selection tool that aims to decrease the risk of failure of public sector projects in Malaysia and increase the chances of succeeding on the public sector digital initiatives.