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Pattern: Irrational Exuberance

December 7, 2007 0 Comments

[Adapted from Patterns in IT Litigation: Systems Failure (1976-2000)]

Summary: The vendor makes claims for the functionality and/or performance benefits of the system. The client buys the system and has it installed. The client then believes that the system does not have the claimed benefits (performance, reliability and/or functionality). In some cases, the client ends up returning the system and acquiring a new one from a different vendor.

Causes: At times the vendor’s IT sales representative may not have sufficient technical experience with the product in question and may make statements, promises, and assurances that (knowingly or unknowingly) lack grounding in reality. And, of course, the sales representative has a strong vested interest in making the sale and therefore may exaggerate somewhat to close the deal.

It is telling that so many of the cases surveyed include charges of fraud. However, even when these statements can be documented, they are dismissed in many cases by the judge as “statements of opinion” or “sales puffing.” Likewise, words and phrases commonly used in the IT industry — such as “beta version”, “performance”, and “free of defects” — are viewed in many cases as being too vague or subjective without express, written definitions of the terms.

On the other hand, the clients often succumb to irrational exuberance themselves. They see the vended system as a “silver bullet” that can slay the ever-challenging IT problems faced. They underestimate the difficulty in installing and adopting new IT systems. They change requirements on the fly, sometimes without notifying the vendor. Or they simply use general statements by the vendor as an excuse for their own inability to make the system operate the way they had hoped. In some situations, the client may suffer from “buyer’s remorse” as the expense and challenges of the new system become apparent, and they may look for reasons to terminate the deal.

Recommendations: Miscommunication, both inadvertent and deliberate, has always been a large factor in IT systems failures. Some of the more common “irrational exuberance” issues can be avoided by making sure both sides agree upon a common, written set of definitions, specifications, and time tables with regards to the systems in question. As questions and issues arise, both sides can refer to and, if necessary, revise the document. This document should also go up and down the chain of command in both organizations as needed to make sure all relevant personnel understand what is promised and what is expected.

About the Author:

Webster is Principal and Founder at at Bruce F. Webster & Associates, as well as an Adjunct Professor for the BYU Computer Science Department. He works with organizations to help them with troubled or failed information technology (IT) projects. He has also worked in several dozen legal cases as a consultant and as a testifying expert, both in the United States and Japan. He can be reached at 303.502.4141 or at

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