A fifth of British IT projects run more than 50% over budget. That's according to a survey of 100 CIOs at large companies in the UK and Ireland, who said that half of IT projects ran 11-50% over budget, and a further 21% of all projects were at least 51% over budget.
Rather depressingly, only 15% of respondents expected live projects to reach their budget targets. Based on an average project budget of £380,000 (NZ$1.025 million) with a 15% overspend, the additional cost to enterprises in the UK and Ireland alone could be £256 million annually.
The research was commissioned by CA from UK research firm Loudhouse, which conducted the survey in July, targeting companies with more than 500 employees. These companies had an IT budget which was typically between £1 million and £5 million, and were on average running 29 IT projects at any one time.
Some CIOs at major financial institutions were ultimately responsible for up to 1,000 projects. CA says the reasons cited for overspends include poor forecasting (blamed in 50% of cases), project scope increasing during the implementation phase (39%), and conflicts between multiple projects (36%).
Only half of the companies surveyed claimed to use delivery on budget as a key measure when evaluating project success. A third of companies measured IT success in terms of business objectives, and just a quarter calculated return on investment based on business value delivered. According to David Groves, CA's director of sales for its Clarity product suite in Northern Europe, IT departments that manage to stick to their budgets do not necessarily score highly on providing value to the enterprise.
Groves commented: "What this survey tells us is that CIOs are still principally being judged on whether they deliver within budget, rather than delivering strategic value to the business. IT need not be the victim here — it must be able to control its own destiny in a way that creates focus on initiatives that deliver the most value to the business, not just on those that keep the lights on. Until IT can make this transition, CIOs will only ever be judged on cost". With 85% of projects in the survey over budget, the average CIO must be getting a hard time from their Board of Directors.
In the survey, 39% of IT directors complained of less than complete visibility over individual projects. Half of the oragnisations serveyed were found to rely on spreadsheets as their main management tool for IT projects. Naturally, CA would prefer that businesses used its Clarity suite, which is for project and portfolio management, instead.
Groves points out that managing projects via spreadsheet, to meet financial targets alone, is inefficient.
"Our survey shows that high skilled people are often assigned to projects purely on an ad hoc basis, meaning that almost two-thirds of companies complain of being short of critical skills on the most strategic projects. This, with other factors, is causing schedules to over-run. It means that budget is wasted on non-core projects and not spent on those that drive innovation and business value."
While the public sector might be castigated on a regular basis for a perceived inability to keep IT costs under control, Groves believes that enterprises have no reason to assert that they are doing any better. When taxpayer's money is not at stake, millions of pounds are being burned on over-budget IT projects without public scrutiny, he suggests.