Feeds

IT overruns costing business €375m a year

A quarter run 50% over budget

The Essential Guide to IT Transformation

Budget overruns on IT projects are costing Irish and UK businesses more than €375m(£256m) a year, new research has revealed.

The study, conducted by research firm Loudhouse on behalf of software company CA, found that one-third of IT projects end up over budget each year, due to poor forecasting, project scope creep and a lack of management control over projects.

Almost a quarter of the projects end up more than 50 per cent over budget, with the typical overspend running between 10 per cent and 20 per cent of the original budget.

The CA study found that half of companies surveyed are using spreadsheets to manage IT initiatives, despite having an average of 29 IT projects running simultaneously, contributing to the difficulty in retaining control over them.

The statistics are even more startling given that half of all companies use 'delivery on budget' as a key measure when evaluating project success. The survey found that only a third measured success by how the projects aligned with business objectives, while only a quarter carry out an ROI (return on investment) calculation based on business value delivered.

"The survey reveals that CIOs are still principally being judged on whether they deliver within budget rather than delivering strategic value to the business," said Frank Kennedy, CA's country manager in Ireland.

"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," he continued. "This means that organisations need to take not just a project-by-project view but also a portfolio view of all IT investments."

The survey was conducted among 100 CIOs and IT directors from companies with more than 500 employees and a typical IT budget of between €1.5m(£1m) and €7.5m(£5m) from large firms in the UK and Ireland.

© 2007 ENN

Build a business case: developing custom apps

More from The Register

next story
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Amazon says Hachette should lower ebook prices, pay authors more
Oh yeah ... and a 30% cut for Amazon to seal the deal
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Nintend-OH NO! Sorry, Mario – your profits are in another castle
Red-hatted mascot, red-colored logo, red-stained finance books
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Feel free to BONK on the TUBE, says Transport for London
Plus: Almost NOBODY uses pay-by-bonk on buses - Visa
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.
Maximize storage efficiency across the enterprise
The HP StoreOnce backup solution offers highly flexible, centrally managed, and highly efficient data protection for any enterprise.