66pc of firms fail to evaluate IT investments

4 Aug 2009

In a new survey carried out on over 1,200 IT professionals from across nine countries worldwide, it was found that 66pc of enterprises fail to fully measure their IT investments, while less than half of those surveyed had a cross-company understanding of what value meant in the context of IT expenditure.

Despite these results, most of these IT professionals stated in the survey that they believe they are getting value from their IT investment – they just could not be sure how this was measured accurately.

To be exact, half of the respondents in this ISACA-conducted survey felt they were getting 50-74pc value back from their IT outlay, while one fifth thought they were receiving 75-100pc value – despite being unsure about how this value was measured.

“This survey illustrates the massive potential for value destruction from ill-considered IT-related business investments,” said Paul Williams, IT strategy chair and IT governance adviser to business consulting firm Protiviti UK.

“The lack of value measurement can lead to misleading and unreliable business cases and the consequent approval of discretionary projects that are unlikely to add to value creation.

“A more robust approach to all aspects of IT investment governance can lead directly to improved financial and operational performance,” he added.

Interestingly, half of the IT professionals that took part in this survey said that responsibility for measuring how well the IT budget had been implemented fell to the IT department rather than the business itself.

“The results of this survey reinforce findings from earlier studies that, while most enterprises feel they are realising value from IT, few have a clear understanding of what value means, and even fewer measure it,” said John Thorp, chair of the Val IT Development Team for ISACA and president of the Thorp Network.

“This raises the question, ‘On what basis are spending decisions made,’ and additionally, enterprises that do not fully measure value are unable to determine which investments are successful and which need to be cut, and thereby are likely to miss out on revenue-generating opportunities, pursue unsuccessful investments and neglect competitive advantage.”