Poor IT governance is one of the key causes of failure in big business transformation projects, according to the latest research.
A report from analyst house the Butler Group found IT governance initiatives were usually deployed only within the IT department, leading to a lack of co-ordination between the IT-led elements of projects and the wider management of business transformation initiatives.
The results of poor IT governance are increased costs due to the inefficiencies of short-term; tactical IT deployments; risk of breaching data security and regulatory compliance requirements; and unproductive use of people and IT assets.
Alan Calder, author of IT Governance: A Manager's Guide blamed a lack of IT-awareness in boardrooms for this poor governance and project failure.
Calder said: "IT governance is the board's job. It is the board's job to make sure this huge capital expenditure is managed in a transparent way. But most boards still have directors who have their PAs print their emails out for them. They are just simply from the wrong generation. You need IT-aware executives and non-executives."
Calder advised businesses to have a separate IT governance committee with non-IT executives to oversee and scrutinise big IT projects and stop them from becoming a black hole for wasting money when things start to go wrong.
He added: "The committee should be there to make sure risks are identified and mitigated and that there is transparency — to ask what methodology, what skills, how much are you planning to spend. You need to have someone who can say 'no, you can't have more money' and who can pull plug if they need to."
Tim Jennings, research director at Butler Group and author of the report, said medium-sized companies of up to 5,000 employees are particularly susceptible to poor returns on IT investment because they are less likely to have the required disciplines in place than large organisations — with many still relying on simple spreadsheets to manage projects.
He said: "Many new business initiatives are reliant on information systems, so the impact of poor IT governance is not just an IT issue but directly reduces the potential business benefits."