Digital Project Risk

February 12, 2020

Tony Zipparro

Digital project risk is something that every single client has a fear of, yet it is seldom talked about. It’s the Voldemort of the scoping process. But not because people are ‘scared’ of talking about it, just because people haven’t been conditioned to think that deeply on the actual meaning of it in a digital application. 

You see I come from a financial background in trading and when introduced to a digital world my mind craves to wrap around the risk / reward trade-off of scenarios. In trading it was all about the upside versus the downside and knowing when to enter a position based on your own personal preference to a risk profile. I can’t unsee this in digital. And as I have gone through a career in working with businesses to build revenue generating machines, my mind always attaches to the often unforeseen (or unaddressed) risks that swim like sharks underneath the project boat. 

I believe most ‘risk analysis’ in a decision making process can vastly improve the long-term results that companies and agencies experience. I see little to none of that analysis being done, and my thoughts about quantifying project risk is the first step in that direction to provide greater visibility for all parties involved. 

Nobody Uses the Word ‘Risk’ In Digital

I still haven’t completely figured it out. I think it’s just an industry vocabulary thing, but no one really uses the term ‘risk’ in digital. It’s masked in other words and phrases, but since day one it has somewhat confounded me. Maybe that’s the numbers guy in me trying to get out. 

But risk in the digital field is real. And it’s not because amounts are small. We are talking about hundreds of thousands to millions of dollars a year or more being thrown around by companies with no direct tieback to ‘risk’ in the digital field. And yet the way companies approach their digital decisions never directly factor it in. 

Never once has a company come to us with a risk / reward profile or asked “talk to me about the digital risks in the project”. It’s indirectly and inefficiently communicated in suboptimal question types like:

  • “how likely are we to hit our launch deadline” or 
  • “show me some other examples similar to what we are looking to do” or 
  • “how many revision cycles do you allow in design”

In essence these and a ton of other similar questions fall into the same boat: trying to relate a businesses’ capabilities with the chance that they can achieve project success for them (the client). Nothing groundbreaking about any of this. Except that I feel re-phrasing projects into a different lense (the one I am about to talk about) will help to strengthen the knowledge that both sides of the equation (the agency and the client) can go into conversations with and ultimately lead to better overall decision making. 

I view the concept of risks within digital as somewhat straightforward. It’s easy to understand and easy to account for once stated. And even if known about it might not have to be actually quantified. Just the awareness of it will help instruct more insightful decisions based on the variables present. In fact I believe for simplicity sake there are only two kinds of digital that should be known and weighed for: Competency Risk & Relational Risk.

These risks weight differently depending on the project you are trying to execute and the risk types can happen throughout the process in many different ways. But the concepts of these risk types are always founded in a couple core instances. 

Defining Digital Project Risk Types

So what is it? Well there are two types of risk within a project. There is the inherent risk from the project execution itself which I call “competency risk”. Think of risk on the build side that the agency primarily takes responsibility for. These can be issues that arise from incompetence within the build / design or issues that pop up unexpectedly from development, testing, marketing, analytics and launch components. The second area of risk is essentially understanding of communications and expectations, hence I call it “relational risk”. It’s born out of the interaction between the client and the agency and often festers itself in miscommunication (or lack of communications) throughout the project. 

Competency Risk

How well can the agency actually carry out the work needed. Period. 

Relational Risk

How well do both the client and agency truly understand the expectations, the value of those expectations and the underlying ‘whys’ of the project. 

Breaking Down Each Type of Risk

In total, ‘digital project risk’ works to derail the ‘plan’ of the project. It can cause delays, frustrations and rework. This risk is what clients are trying to protect themselves throughout the scoping process. Nobody wants it. Nobody needs it. But it almost always occurs. 

The irony is that the focus on the ‘risk’ within a project is often only partial and one-dimensional in the traditional scoping process. Almost all companies look to protect against the competency risk in a project, few take the step to protect against the relational risk. 

Why? Cause it’s hard. It takes a more personal approach to your potential partner and above all it requires deep thinking and expectation setting introspectively before you can do it external. Commonly misguided companies feel the scoping process is all about finding the right partner for them. Yet they never account for if they are the right partner for the agency. Companies assume because they are cutting the checks someone else should conform to them. Right?

I mean if you are remodeling your basement you would expect the contractor to cater to you. Come out to you, spend time understanding your needs, break down a quote that fits your budget and visual goals. 

While that is of course an important part of a relationship, it’s not a priority. Why? Because all too often, what you are asking for digitally is not actually what you need. So in a highly variable scope market like digital you cannot ‘stick to your guns’ of wanting someone to conform to what you need. Because the issue is if your scope unwittingly changes and someone conformed to those original standards…you need a partner that can flex out of it. 

Risk #1: Competency Risk

So back to this concept of risk. When does it occur? Looking at the competency risk component puts it all into the project itself. It’s the risk of the agency being able to share your visual vision and deliver on it (i.e. to deliver designs you like). It’s being able to have knowledge and preferably experience in building out similar applications / websites so that technical risk is mitigated (i.e. we have never built a portal that integrates within an ERP vs we have done it 20+ times and with your utilized ERP system). It’s having the staff and resources for the services you are enlisting in to help guide you through the process (i.e. project managers that hold your hand, content strategists that help guide you in the right direction, etc.). 

All of this risk is during the actual process of the project. And yes, it hosts some large risks. If you don’t like the designs and can’t get there with the agency the sacrifice you have to make to one side or the other is pretty massive. You either have to accept mediocrity in your vision or cut the cord and start the scoping process over again with another agency.

Competency Risk is dependent on the services you are enlisting and in digital or UX / UI projects it can be present in one, some or all of the following:

  • Research & Strategy: Time spent understanding the client and making recommendations on those understandings in the form of deliverables. These deliverables can be mood boards, color palettes, inspiration sites, sitemap, UX Flow, stakeholder / user interviews or anything else that is provided to you in the form of a document to review for the plan going forward.
  • Digital Design: The actual visuals that help to represent what your project will look like. If it is a website it involves potential wireframes of lo-fi mockups and of course the actual high fidelity mockups of the pages / layouts. In non-web projects it involves the creative for an ad campaign, social profile or other graphic illustrations.
  • Development: The front-end styling and the back-end functioning of what the digital project is supposed to accomplish. It includes making sure the designs have been converted appropriately to represent the UX / UI in code and of course the testing of features such as searching, buying, signing up, putting in calculations, etc. or whatever else was supposed to be developed.
  • Content: What your website or portal actually says. The blogs, the posts, the pages and the case studies. The words that represent your brand whether it is solely content, messaging or “branding”. A can of worms for another discussion, the idea of risk within “content creation” is somewhat large as it deals with a good amount of company sentiment.
  • Visual Media: The photos and videos that are peppered throughout your digital tool. These could be as simple as the selection of iStock photos or custom created from a photography or videographer. 
  • Training: The hand-off of knowledge on how to utilize the system that has been built for you. The training of your team on how to use the CMS, software or integrations.
  • Launch: The taking of the site from a staging server to a production environment. In many cases just the checking of links (301 redirects) and transfer of data, it can go much more in-depth when e-commerce, accounts and cron jobs are part of the platform.

So why does all of this matter? It’s because the single biggest risks that most companies endure today as they relate to digital projects have nothing to do with competency risk (ie the above). The largest risk you face in a project actual happens before it even starts. It sits like an iceberg during the sales and scoping process, just barely visible, and oftentimes totally ignored. 

You see, competency risk is well addressed in the current process. It is definitely crucial to picking the right partner and having project success. But in order to have a higher probability of having a successful project, relational risk must be addressed. 

Risk #2: Relational Risk

Relational risk is the risk of even knowing and agreeing upon what is being built. It provides the guidelines to how the project will run and what will happen as variables begin to change. 

So what does relational risk look like? It manifests in all different kinds of ways (during the project too), but for purposes of insight the main focus here is what it looks like before the project. 

I have developed a graphic that while not representative of every project (warning its crude), I feel helps to display the actual ‘risk’ picture as it flows throughout the phases of the project. It showcases that the majority of risk is actually built up in the beginning of the project. This is counterintuitive as most companies and agencies seem to think that risk is in the project

Digital Project Risk 1

Relational Risk said another way: It’s the questions asked by companies, and answered by the agency and the intuitive meaning that each party thinks of those topics after the fact.

So how do you overcome only focusing on competency risk? While easy in concept, in reality it is much more difficult. The primary reason for it’s difficulty to easily implement is just because the nature of the current ‘marketplace’ for scoping and agency relations does not have it as a social norm. 

It starts with the questions you ask and allow to be asked to you as a company. Think about it for a second. Let’s say you are looking (or have just looked) for someone to carry out digital tasks for you (marketing, web, graphic, development, etc.). What kinds of questions did you ask?

I would bet that almost ALL of them focus on either vetting the capability or competency of the agencies competing. They ask about examples of what they have done in the best or how they will potentially work through your project in the future. It asks about the phases, the feedback loops, the project management and the strategy that will be employed. 

What they don’t focus on is anything on how the agency will help you understand what is right and wrong about your perceived features, functions and wants for a digital project. 

You see, while it is valuable and possible to glean relational information from competency-centered questions, it’s not the direct source of getting there. It’s a roundabout way to help provide you some anecdotal information. It might work to inform you enough, but it might not.

Despite the detailing above I do not necessarily believe that you should try to quantify or create a risk system that you plug into. In truth this idea is a work in progress of my own mind. But for now I believe that you should not make a “grading sheet” and then fit all your contenders into it. I do not think structure will help. In fact I know structure and process that is too rigid (queue RFPs) have a tremendous negative effect on the intended goals of starting the project off on the right foot. 

I think the usage and depth of usage is dependent on the parties involved and on their business goals and objectives. It’s having awareness that risk in digital projects is real and daunting. Being able to best ‘direct’ and ‘mitigate’ risk is a win-win game for everyone in the long run. Sure it may cause a client to take business away from an agency or an agency to turn business down. But that only helps to drive the right ways of thinking about digital, projects and in a sense life and relationships.

Be aware of it. Have open conversations in the beginning that are more insightful that just selling something. Care more about helping people and reducing their risk in relation to whether or not you are the right person or business to work with. If nothing else actively ask yourself these questions when you have the deal in the bag:

  • What am I not asking about that I could
  • What are the biggest weaknesses I bring to the relationship
  •  “How can I reduce the risk of misunderstanding before signing”
  • Does the agency across from me actually care more about me as a person than the monetary status of my business’ work?
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