New research into IT project failures
Computer Associates has released a study into the causes of IT project failures. Although full results have not been released publicly, I did obtain the detailed slides, some of which are presented below. From the press release:
New research from CA, conducted by independent research company Loudhouse of 100 IT Directors across the UK and Ireland, reveals that poor visibility of IT project status and a lack of management control over them is costing the UK over a quarter of a billion pounds each year. A third of all projects implemented each year end up over budget with the typical over-spend between 10% and 20% of the original budget. The survey also highlighted the increased complexity of IT projects, with a typical company running 29 projects at any one time and an average IT budget of between £1m and £5m.
The primary reasons for the budget over-spend is as a result of poor forecasting (50%), project scope increasing during implementation (39%) and issues of interdependencies and conflicts between multiple projects (36%). This isn’t helped by the lack of visibility and control that CIOs have over their project portfolios - 40% of IT directors don’t have complete visibility over the initiatives they are running, so cannot see when projects are threatening to run over budget.
As shown in the first slide below, the study describes questions IT managers can ask, to determine whether their project is in trouble. [For information on rescuing failed projects, see this blog posting.]
The study suggests that 32% of IT projects go over-budget. In contrast, the 2006 Standish Group Chaos Report, states that 46% of application development projects are "challenged," meaning they fail to deliver results on-time, within budget, or in scope. Personally, I trust the Standish Group numbers, since that firm specializes in collecting and analyzing IT failure statistics.
According to the next slide, projects go over-budget because the baseline scope was set incorrectly. Unfortunately, this simplistic analysis does not explain why the scoping was wrong in the first place.
This next slide is scary: it suggests IT Directors don't know what's going inside their own organizations.
The CA study provides current data around IT project failures. However, the conclusions and information could have been more useful with additional analysis, insight, and depth. Nonetheless, CA is to be applauded for sponsoring research into this important area.