Detective Joe Friday was a “by-the-book” cop who stuck precisely to the facts. If Joe has been investigating the homicide of an IT Project he would have insisted on “just the facts please, m’am”
So …. Joe, here are the facts:
1. Only in IT is project completion considered to be a success. In what other business does finishing constitute success. Can you imagine a house being built 75% over budget and 1 out of every 2 houses was unfit for human habitation …. but the builder never-the-less claimed success, and of course full payment
2. 60% of projects fail – for a variety of reasons and to a range of different stages of completion. But the global average is that 60% of IT projects fail
3. Most telling, 48% of projects fail to meet the basic business need that they were commissioned to address
4. And the average project over-run is 75%. I don’t mean that 75% of projects over-run their initial budget. I mean that of ALL projects undertaken the average cost blowout is 175% of the original budget. A recent study in Canada showed that the average budget for an IT project (out of thousands measured) was $3 million, but on average those projects actually cost $5.4 million – a cost blowout of 75% over the original estimate.
In the Canadian study it was estimated that right across all sectors of the Canadian economy $25Billion was spent annually on IT projects. If we extrapolate the total IT spend across our “facts” we see that $10billion was spent over-budget. $15 billion was spent on projects which failed in one way or another.
Of that $15billion, fully $12 Billion was due to a fundamental mis-alignment between what the business needed and what IT delivered.
How much is mis-alignment between IT and Business costing your organisation ?
Well …. The facts speak for themselves. As they say in the classics “do the math”. Your company is spending between 3% and 7% of its total revenues on IT. Service companies are at the top end of the scale with highly capital intensive and extraction type businesses at the lower end. But lets say … at minimum 5% of your revenues go on IT, and roughly half of that figure is failing to deliver value !
Focus on What’s Important!