One in four IT projects 50pc over budget

12 Sep 2007

Just over a quarter of all IT projects end up more than 50pc over budget and half of all overspends are due to poor forecasting, a survey of 100 Ireland and UK-based CIOs and IT directors reveals.

This lack of management control is costing Irish and UK enterprises over €375m per annum, says software vendor CA.

One-third of all IT projects implemented each year end up over budget with the typical overspend of between 10pc and 20pc of the original budget.

The CA survey also revealed that IT projects are growing in complexity with a typical large company running 29 projects at any one time.

Half of all overspends are due to poor forecasting. Other reasons include the project’s scope being increased while underway and conflicts between multiple projects.

Another problem is poor visibility and lack of control CIOs appear to have over their project portfolios. Some 39pc of CIOs and IT directors don’t have complete visibility over the initiatives they are running and cannot see when projects are threatening to run over budget.

A reason for this lack of visibility and control is the poor tools managers and CIOs employ.

More than half of CIOs confess to still using spreadsheets to manage IT initiatives.

Few managers also can tell the difference between which projects are strategic or not and 59pc believe that less than half the projects they are currently working can be considered strategic.

“In Ireland, we have seen a number of high-profile IT projects running way over budget or not meeting their business objectives,” said CA Ireland country manager Frank Kennedy.

“Maybe this isn’t surprising when the survey shows that half of all enterprise companies are still using spreadsheets to manage IT projects.”

Kennedy said that in order to ensure CIOs can focus their attention on the most important projects and the ones that add most value to the business, it’s essential that they are presented with a clear and holistic view of their organisation.

“This means that organisations need to take not just a project-by-project view but also a portfolio view of all IT investments. They need to invest now in the project and portfolio management tools that can allow them to do this effectively.

“This will ensure that business investments are not wasted on non-core activities and that the focus is on those activities that drive innovation and business value,” Kennedy concluded.

By John Kennedy